<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 22, 1999
REGISTRATION NO. 333-80423
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
WFS FINANCIAL 1999-C OWNER TRUST
WFS FINANCIAL AUTO LOANS, INC.
(ORIGINATOR OF THE TRUST DESCRIBED HEREIN)
<TABLE>
<S> <C> <C>
CALIFORNIA 9999 33-0149603
(STATE OR OTHER JURISDICTION OF (PRIMARY SIC (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92618
(949) 727-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
THOMAS A. WOLFE
PRESIDENT
WFS FINANCIAL AUTO LOANS, INC.
23 PASTEUR ROAD
IRVINE, CALIFORNIA 92618
(949) 727-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
ANDREW E. KATZ, ESQ. DALE W. LUM, ESQ.
MITCHELL, SILBERBERG & KNUPP LLP BROWN & WOOD LLP
11377 W. OLYMPIC BOULEVARD 555 CALIFORNIA STREET
LOS ANGELES, CALIFORNIA 90064-1683 SAN FRANCISCO, CALIFORNIA 94104-1715
(310) 312-2000 (415) 772-1200
</TABLE>
------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
================================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM AMOUNT OF
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE*
- --------------------------------------------------------------------------------------------------------------------------------
Auto Receivable Backed Securities........... $500,000,000 100% $500,000,000 $139,000
================================================================================================================================
</TABLE>
* Estimated, pursuant to Rule 457(a) under the Securities Act, solely for the
purpose of calculating the registration fee on the basis of the proposed
maximum offering price per unit. Of this amount, $278.00 has been previously
paid.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE AS MAY
BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2
The information contained in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 22, 1999
$500,000,000
WFS FINANCIAL 1999-C OWNER TRUST
<TABLE>
<S> <C>
WFS FINANCIAL AUTO LOANS, INC. WFS FINANCIAL INC
SELLER MASTER SERVICER
</TABLE>
THE TRUST WILL ISSUE THE FOLLOWING SECURITIES:
<TABLE>
<CAPTION>
INTEREST OR
PASS-THROUGH
PRINCIPAL AMOUNT RATE FINAL MATURITY DATE
---------------- ------------ -------------------
<S> <C> <C> <C>
Class A-1 Notes...... $224,100,000 % July 20, 2002
Class A-2 Notes...... $149,425,000 % January 20, 2004
Class A-3 Notes...... $ 73,975,000 % October 20, 2004
Certificates......... $ 52,500,000 % January 20, 2007
</TABLE>
-- The trust will pay interest and principal on the securities
on January 20, April 20, July 20, and October 20 of each
year, or the first business day thereafter. The first
payment date will be January 20, 2000.
-- The trust will pay principal sequentially to the earliest
maturing class of securities then outstanding until paid in
full.
THE UNDERWRITERS ARE OFFERING THE SECURITIES AS FOLLOWS:
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE(1) DISCOUNTS SELLER(1)(2)
----------------- ------------ ---------------
<S> <C> <C> <C>
Per Class A-1 Note......... % % %
Per Class A-2 Note......... % % %
Per Class A-3 Note......... % % %
Per Certificate............ % % %
Total...................... % % %
</TABLE>
---------------------------------------------
(1) The price of the offered notes and certificates will
also include interest accrued on the offered
securities, if any, from October 1, 1999.
(2) Before deducting expenses payable by the seller
estimated to be $275,000.
- ---------------------------
YOU SHOULD CAREFULLY
REVIEW THE RISK
FACTORS BEGINNING ON
PAGE 10 OF THIS
PROSPECTUS. The
securities are
automobile loan asset
backed securities
issued by a trust.
The securities are
not obligations of
WFS Financial Auto
Loans, Inc., WFS
Financial Inc or any
of their affiliates,
nor are they insured
by the Federal
Deposit Insurance
Corporation.
- ---------------------------
NEITHER THE SECURITIES EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS....... 4
WHERE TO FIND INFORMATION IN THESE
DOCUMENTS.......................... 4
SUMMARY OF TERMS................... 5
The Securities................... 5
The Terms of the Securities...... 6
Security For The Securities...... 6
Priority of Principal Payments... 8
Optional Purchase................ 8
Optional Redemption and
Prepayment.................... 8
Mandatory Redemption............. 8
The Master Servicer.............. 9
Tax Status....................... 9
ERISA Considerations............. 9
Risk Factors..................... 9
RISK FACTORS....................... 10
Absence of Secondary Market for
the Securities Could Limit
Your Ability to Resell the
Securities.................... 10
The Ratings of the Securities May
be Withdrawn or Revised Which
May Have an Adverse Effect on
the Market Price of the
Securities.................... 10
Losses on Contracts May be
Affected Disproportionately
Because of Geographic
Concentration of Contracts in
California.................... 10
FORMATION OF THE TRUST............. 11
General.......................... 11
Capitalization................... 12
The Owner Trustee................ 13
THE CONTRACTS POOL................. 13
Distribution of Contracts by
APR........................... 15
Geographic Concentration of the
Contracts........................ 16
Underwriting Procedures Relating
to the Contracts.............. 17
Delinquency and Contract Loss
Information................... 19
POOL FACTORS AND TRADING
INFORMATION...................... 21
USE OF PROCEEDS.................... 21
THE NOTES.......................... 21
General.......................... 21
Payments of Interest............. 22
Payments of Principal............ 22
Optional Redemption.............. 23
The Indenture Trustee............ 23
Events of Default................ 23
THE CERTIFICATES................... 25
General.......................... 25
Distributions of Interest........ 25
Distributions of Principal....... 26
Optional Prepayment.............. 26
Mandatory Prepayment............. 27
Paying Agents.................... 27
CERTAIN INFORMATION REGARDING THE
SECURITIES......................... 27
Book-Entry Registration.......... 27
DTC's Year 2000 Efforts.......... 28
Definitive Securities............ 29
Payments on the Contracts........ 30
The Accounts and Eligible
Investments................... 31
Distributions on the
Securities.................... 32
Payment Priorities of the Notes
and the Certificates; The
Spread Account................ 36
Withdrawals from the Spread
Account....................... 38
Payments from the Spread Account
and Under the Policies........ 38
Statements to Securityholders.... 38
Evidence as to Compliance........ 39
Certain Matters Regarding the
Master Servicer............... 40
Servicer Default................. 40
Rights Upon Servicer Default..... 42
Waiver of Past Defaults.......... 42
Voting Interests................. 42
Amendment........................ 43
List of Securityholders.......... 45
No Bankruptcy Proceedings........ 45
Termination...................... 46
Payment in Full of Notes......... 46
The Trustees..................... 46
Duties of the Trustees........... 47
Administration Agreement......... 47
Prepayment Considerations........ 48
</TABLE>
2
<PAGE> 4
<TABLE>
<S> <C>
THE POLICIES....................... 49
The Note Policy.................. 49
The Certificate Policy........... 50
Other Terms of the Policies...... 50
FINANCIAL SECURITY ASSURANCE
INC.............................. 52
General.......................... 52
Reinsurance...................... 53
Ratings.......................... 53
Capitalization................... 53
Insurance Regulation............. 54
THE MASTER SERVICER................ 54
Collection of Payments........... 55
Advances......................... 55
Insurance on Financed Vehicles... 55
Servicer Determination and
Reports to Trustees........... 56
Servicing Compensation........... 56
Realization Upon Defaulted
Contracts..................... 57
Year 2000 Compliance............. 57
CERTAIN LEGAL ASPECTS OF THE
CONTRACTS.......................... 58
General.......................... 58
Security Interests in the
Financed Vehicles............. 58
Enforcement of Security Interests
in Financed Vehicles.......... 60
Other Matters.................... 61
Repurchase Obligation............ 61
THE SELLER......................... 62
Breach of Representation and
Warranties; Defective Contract
Documentation................. 62
WFS................................ 62
General.......................... 63
Business Activities.............. 63
WII................................ 63
THE BANK........................... 63
General.......................... 63
Business Activities.............. 64
FEDERAL INCOME TAX CONSEQUENCES.... 64
Tax Characterization of Trusts... 64
Tax Consequences to Holders of
the Notes..................... 65
Tax Consequences to Holders of
the Certificates.............. 66
CALIFORNIA INCOME TAX
CONSEQUENCES..................... 70
ERISA CONSIDERATIONS............... 71
Overview......................... 71
Prohibited Transactions.......... 71
The Notes........................ 71
The Certificates................. 72
UNDERWRITING....................... 72
Class A-1, A-2, and A-3 Notes.... 72
Certificates..................... 73
LEGAL MATTERS...................... 73
EXPERTS............................ 74
FORWARD-LOOKING STATEMENTS......... 74
INDEX OF DEFINITIONS............... A-1
</TABLE>
3
<PAGE> 5
IMPORTANT NOTICE ABOUT INFORMATION
PRESENTED IN THIS PROSPECTUS
You should rely on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information.
We do not claim the accuracy of the information in this prospectus as of
any date other than the date stated on the cover of this prospectus.
The documents incorporated by reference in this prospectus can be obtained
by sending a request to: Guy Du Bose, Esq., Secretary, WFS Financial Inc, 23
Pasteur Road, Irvine, California 92618 or by calling (949) 727-1000.
We have filed with the Securities and Exchange Commission a registration
statement in connection with the securities being offered in this prospectus.
This prospectus is a part of the registration statement but does not contain all
of the information included in the registration statement. Some information in
this prospectus is not complete and refers you to exhibits and schedules
contained in the registration statement. You can review and copy the
registration statement at the following locations:
- Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549
- Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661
- 7 World Trade Center, Suite 1300, New York, New York 10048
- http://www.sec.gov.
If you purchase securities you will also be provided with unaudited
quarterly and annual reports concerning the automobile loan contracts which back
the securities.
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
We have included cross-references to captions in these materials where you
can find further related discussions. We have started with an introductory
section describing the trust and terms of this offering in abbreviated form,
followed by a more complete description of the terms of this offering.
Cross-references may be contained in the introductory section which will
direct you elsewhere in this prospectus. You can also find references to key
topics in the Table of Contents on the preceding pages.
You can find a listing of the pages where capitalized terms are defined
under the caption "Index of Definitions" beginning on page A-1 of this
prospectus.
4
<PAGE> 6
SUMMARY OF TERMS
This summary highlights selected information from this document and does
not contain all of the information that you need to consider in making your
investment decision. You will find a detailed description of the offering of
securities following this summary.
The Issuer or the Trust..... WFS Financial 1999-C Owner Trust ("Trust")
Seller...................... WFS Financial Auto Loans, Inc. ("WFAL")
Seller's Address............ 23 Pasteur Road, Irvine, California 92618
Seller's Telephone Number... (949) 727-1000
Master Servicer............. WFS Financial Inc ("WFS")
Indenture Trustee........... Bankers Trust Company
Owner Trustee............... Chase Manhattan Bank Delaware
The Trust Property.......... The trust property will include:
- a pool of retail installment sales contracts and
a limited number of installment loans originated
by WFS all secured by new or used automobiles or
light duty trucks;
- an insurance policy written by Financial
Security Assurance Inc. ("Financial Security")
guaranteeing all payments to be made to holders
of the notes;
- an insurance policy written by Financial
Security guaranteeing all payments to be made to
holders of the certificates; and
- the funds in the spread account.
THE SECURITIES:
The Notes................... The WFS Financial 1999-C Owner Trust Auto
Receivable Backed Notes will represent obligations
of the Trust secured by the assets of the Trust.
The Certificates............ The WFS Financial 1999-C Owner Trust Auto
Receivable Backed Certificates will represent
fractional undivided interests in the Trust.
5
<PAGE> 7
THE TERMS OF THE SECURITIES
<TABLE>
<CAPTION>
CLASS A-1 CLASS A-2 CLASS A-3
NOTES NOTES NOTES CERTIFICATES
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Principal Amount..... $ 224,100,000 $ 149,425,000 $ 73,975,000 $ 52,500,000
Interest Rate or
Pass-Through Rate
Per Annum.......... % % % %
Interest Accrual
Method............. actual/360 30/360 30/360 30/360
Distribution Dates... * * * *
First Distribution
Date............... January 20, 2000 January 20, 2000 January 20, 2000 January 20, 2000
Final Distribution
Date............... July 2002 January 2004 October 2004 January 2007
Anticipated Ratings
(Moody's/Standard &
Poor's)**.......... Aaa/AAA Aaa/AAA Aaa/AAA Aaa/AAA
</TABLE>
- ---------------
* Payments of interest and principal on the Securities will be made on January
20, April 20, July 20 and October 20 of each year, or the first business day
thereafter, beginning on January 20, 2000. Principal will be paid
sequentially to the earliest maturing class until paid in full.
** It is a condition to the offering of the Securities that these ratings be
obtained from Moody's Investors Services, Inc. ("Moody's") and Standard &
Poor's, a division of the McGraw-Hill Companies, Inc. ("Standard & Poor's"
and, together with Moody's, the "Rating Agencies"). However, a Rating Agency
in its discretion may lower or withdraw its rating in the future.
6
<PAGE> 8
SECURITY FOR THE SECURITIES
A. The Contracts
GRAPH
- The Trust also receives the right to payments due under the Contracts on
and after October 1, 1999.
- The Contracts are secured by first liens on the vehicles purchased under
each Contract.
- The Contracts will have an expected weighted average annual percentage
rate of approximately 14.77% and an expected weighted average remaining
maturity of approximately 61 months.
- Approximately 10.78% of the aggregate principal amount of the Contracts
will be "Rule of 78's Contracts" and approximately 89.22% will be "Simple
Interest Contracts." See "Index of Definitions" for the definition of
"Rule of 78's Contract" and "Simple Interest Contract."
B. The Spread Account
The Spread Account is a segregated trust account in the name of the
Indenture Trustee that will afford you some limited protection against losses on
the Contracts. The Spread Account will be part of the Trust. It will be created
with an initial deposit by the Seller of $20,000,000 (the "Spread Account
Initial Deposit"). On any Distribution Date, the funds that are available from
the Spread Account will be distributed to you to cover any shortfalls in
interest and principal required to be paid on the Securities. The funds in the
Spread Account will be supplemented on each payment date by any funds in the
collection account remaining after making all of the payments necessary on that
Distribution Date. The funds in the Spread Account will be supplemented until
they are at least equal to 7% or 10% of the sum of the remaining principal
balance of the Simple Interest Contracts and the present value of the remaining
scheduled payments of the monthly principal and interest due on the Rule of 78's
Contracts. The rate to be applied will depend upon the loss and delinquency rate
of the Contracts.
7
<PAGE> 9
If on the last day of any month or on any payment date the amount on
deposit in the Spread Account is greater than the amount required to be in that
account on that date, the excess cash will be distributed first to Financial
Security, to the extent of any unreimbursed amounts due to it, then to the
Seller until the Seller has received an amount equal to the Spread Account
Initial Deposit and finally to the Seller and WFS Investments, Inc. ("WII"). You
will have no further rights to any such excess cash.
C. The Policies
Financial Security will issue policies that guarantee all payments due to
the Noteholders and Certificateholders.
PRIORITY OF PRINCIPAL PAYMENTS
Principal of the Securities will be paid on each payment date in the
following order:
(1) to the Class A-1 Notes until the Class A-1 Notes are paid in full;
(2) to the Class A-2 Notes until the Class A-2 Notes are paid in full;
(3) to the Class A-3 Notes until the Class A-3 Notes are paid in full; and
(4) to the Certificates until the Certificates are paid in full.
OPTIONAL PURCHASE
The Seller may purchase all of the Contracts owned by the Trust at any
Distribution Date at which the aggregate principal balance of the Simple
Interest Contracts plus the aggregate of the present value of the remaining
monthly principal and interest due on the Rule of 78's Contracts owned by the
Trust is equal to or less than $50,000,000.
OPTIONAL REDEMPTION AND PREPAYMENT
If the Seller does purchase all of the Contracts of the Trust pursuant to
an Optional Purchase as discussed above:
- each class of outstanding Notes will be redeemed in whole at a price
equal to the unpaid principal amount of that class of Notes plus the
accrued interest at that class of Notes' interest rate; and
- the Certificates will be repaid in whole at a price equal to the unpaid
principal amount of the Certificates plus accrued interest at the
Certificate's interest rate.
MANDATORY REDEMPTION
The Notes may be accelerated if an Event of Default has occurred and is
continuing under the Indenture. If an Insurer Default has occurred and is
continuing and an Event of Default has occurred and is continuing, the Indenture
Trustee may be permitted to accelerate the Notes. If an Event of Default has
occurred and is continuing but no Insurer Default has occurred and is
continuing, Financial Security may be permitted to have the right (in addition
to its obligation to make Scheduled Payments on the Notes in accordance with the
terms of the Note Policy), but not the obligation, to elect to accelerate the
Notes. If the Notes are accelerated, the Master Servicer or the Indenture
Trustee will sell or otherwise liquidate the property of the Trust and
8
<PAGE> 10
deliver the proceeds to the Indenture Trustee for distribution in accordance
with the terms of the Indenture.
THE MASTER SERVICER
WFS, as Master Servicer, will be obligated pursuant to the terms of the
Sale and Servicing Agreement to service the Contracts and to repurchase
Contracts if:
- any representation or warranty made by WFS is incorrect, or it breaches
its obligations under the Sale and Servicing Agreement to collect
payments on the Contracts or to maintain a first priority perfected
security interest in each Contract;
- such incorrectness or breach is not cured within 30 days; and
- such incorrectness or breach materially and adversely affects a Contract.
TAX STATUS
In the opinion of Mitchell, Silberberg & Knupp LLP, special counsel for
federal income and California income tax purposes:
- the Notes will be characterized as debt; and
- the Trust will not be characterized as an association or a publicly
traded partnership taxable as a corporation.
If you purchase a Note, you agree to treat it as debt for tax purposes. If
you purchase a Certificate, you agree to treat the Trust as a partnership and
yourself as a partner for federal income tax purposes.
ERISA CONSIDERATIONS
The Notes, but not the Certificates, are generally eligible for purchase by
employee benefit plans that are subject to the Employee Retirement Income
Security Act of 1974 ("ERISA"). However, administrators of employee benefit
plans should review the matters discussed under "ERISA Considerations" in this
prospectus and also should consult with their legal advisors before purchasing
Notes.
RISK FACTORS
The Securities offered hereby are subject to several risk factors. The
ratings of the Securities may be changed or withdrawn and do not include any
assessment as to the prepayment of the Securities. Approximately 40.28% of the
Contracts, based upon the aggregate principal balance of the Contracts will have
been originated in California. Accordingly, adverse economic conditions in
California may have a disproportionate effect on the losses on the Contracts.
You may not be able to sell the Securities because no secondary market exists
for them and none may develop. See "Risk Factors" for a more detailed discussion
of such risks.
9
<PAGE> 11
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase any of the Securities.
ABSENCE OF SECONDARY MARKET FOR THE SECURITIES COULD LIMIT YOUR ABILITY TO
RESELL THE SECURITIES
The absence of a secondary market for the Securities could limit your
ability to resell them. This means that if in the future you want to sell any of
these Securities before they mature, you may be unable to find a buyer or, if
you find a buyer, the selling price may be less than it would have been if a
market existed for the Securities. There currently is no secondary market for
the Notes or the Certificates. The Underwriters expect to make a market in the
Securities but will not be obligated to do so. There is no assurance that a
secondary market for the Securities will develop. If a secondary market for the
Securities does develop, it might end at any time or it might not be
sufficiently liquid to enable you to resell any of your Securities.
THE RATINGS OF THE SECURITIES MAY BE WITHDRAWN OR REVISED WHICH MAY HAVE AN
ADVERSE EFFECT ON THE MARKET PRICE OF THE SECURITIES
It is a condition of issuance that the Securities be rated as follows:
<TABLE>
<CAPTION>
STANDARD & POOR'S MOODY'S
----------------- -------
<S> <C> <C>
Class A-1, Class A-2 and Class A-3 Notes and
the Certificates................................. AAA Aaa
</TABLE>
The ratings by Standard & Poor's of the Notes will be issued without regard
to the benefit afforded by the Note Policy. The rating by Moody's of the Notes
will be based on the issuance of the Note Policy by Financial Security. The
ratings by each Rating Agency of the Certificates will be based on the issuance
of the Certificate Policy by Financial Security.
The Rating Agencies can revise or withdraw their ratings at any time if
they feel the circumstances which lead to the existing ratings have changed
(including, in the case of the Certificates and, with respect to Moody's in the
case of the Notes, as a result of any change in the claims-paying ability of
Financial Security). A revision or withdrawal of the existing rating may have an
adverse effect on the market price of the related Notes and Certificates.
A security rating is not a recommendation to buy, sell or hold the
Securities. The ratings are an assessment by the Rating Agencies of the
likelihood that the Securities will be paid in full by the related final
distribution date. The ratings do not consider to what extent the Securities
will be subject to prepayment.
LOSSES ON CONTRACTS MAY BE AFFECTED DISPROPORTIONATELY BECAUSE OF GEOGRAPHIC
CONCENTRATION OF CONTRACTS IN CALIFORNIA
As of September 30, 1999, WFS' records indicate that 40.28% of the
aggregate principal balance of the Contracts will be from Contracts originating
in California. No other state accounted for more than 5.88% of the aggregate
principal balance of the Contracts. Therefore, economic conditions or other
factors affecting California in particular could adversely affect the losses on
the Contracts.
10
<PAGE> 12
FORMATION OF THE TRUST
GENERAL
The Trust will be a business trust formed for the transaction described in
this Prospectus under the laws of the State of Delaware pursuant to a trust
agreement which will be amended and restated on November , 1999 (the "Closing
Date") (the "Trust Agreement"). After its formation, the Trust will only engage
in the following activities:
- acquiring, holding and managing the Contracts and the other assets of the
Trust and proceeds therefrom;
- issuing the Notes and the Certificates;
- making payments on the Notes and the Certificates; and
- engaging in other activities that are necessary, suitable or convenient
to accomplish the foregoing purposes or are incidental thereto or
connected therewith.
On the Closing Date, the Seller will establish the Trust by selling and
assigning the Contracts to the Trust. WFS will act as Master Servicer of the
Contracts and will receive compensation and fees for those services. WFS, as
Master Servicer, may retain physical possession of the original executed
Contracts, and certain other documents or instruments relating to the Contracts,
as custodian for the Owner Trustee pursuant to the Sale and Servicing Agreement,
or may employ one or more Subservicers as custodians. In order to protect the
Trust's ownership interest in the Contracts, the Trust's interest in the
Contracts will be perfected by the Seller filing UCC-1 financing statements in
the State of California to give notice of the Trust's ownership of the
Contracts. Under the Sale and Servicing Agreement and the Indenture, WFS will be
obligated to take all necessary steps to preserve and protect the interests of
the Trustees in the Contracts. Neither the Indenture Trustee nor the Owner
Trustee will be responsible for the legality, validity or enforceability of any
security interest in respect of any Contract. WFS will not physically segregate
the Contracts from other retail installment sales contracts and installment
loans owned or serviced by it and will not stamp the Contracts with notice of
the sale to the Seller or the Trust. See "Certain Legal Aspects of the
Contracts."
Simultaneously with the issuance of the Securities, Financial Security will
issue a policy ("Note Policy") to the Indenture Trustee and a policy
("Certificate Policy," and together with the Note Policy, the "Policies") to the
Owner Trustee for the benefit of the Noteholders and Certificateholders
(together, the "Securityholders"). Under the Note Policy and the Certificate
Policy, Financial Security will unconditionally and irrevocably guarantee to the
related Securityholders full and complete payment of the Scheduled Payments and
the Guaranteed Distributions, respectively, for each Distribution Date.
Financial Security will have a lien on the Contracts and other documents
relating to the Contracts subordinate to the interest of the Securityholders,
which lien cannot be executed upon until all required payments under the
Policies have been made. See "The Policies."
On and after the Closing Date, the property of the Trust will consist of:
- Contracts secured by new or used automobiles and light duty trucks (the
"Financed Vehicles");
- principal and interest due under the Contracts on and after October 1,
1999 (the "Cut-Off Date");
- security interests in the Financed Vehicles;
11
<PAGE> 13
- the Note Policy;
- the Certificate Policy;
- amounts on deposit in the Collection Account, the Note Distribution
Account, the Certificate Distribution Account, the Spread Account and the
Holding Account, including all Eligible Investments therein and all
income from the investment of funds therein and all proceeds therefrom;
- proceeds from claims under certain insurance policies in respect of
individual Financed Vehicles or obligors under the Contracts (the
"Obligors"); and
- rights as a third party beneficiary under the sale and servicing
agreement to be dated as of November 1, 1999 (the "Sale and Servicing
Agreement"), among the Trust, the Seller and the Master Servicer.
Pursuant to the Indenture, the property of the Trust (other than the Note
Distribution Account, the Certificate Distribution Account, the Note Policy and
the Certificate Policy) will be held by the Master Servicer for the benefit of
the Indenture Trustee and Financial Security on behalf of the holders of the
Notes.
After the sale and assignment of the Contracts to the Trust, WFS as the
Master Servicer must repurchase Contracts only if:
(a) one of the following occur:
- any representation or warranty made by WFS is incorrect;
- WFS breaches its obligations under the Sale and Servicing Agreement
regarding collection of payments on the Contracts; or
- WFS fails to maintain a first priority perfected security interest in
each Contract;
(b) such incorrectness or breach listed in (a) above is not cured within 30
days; and
(c) that incorrectness or breach materially and adversely affects a
Contract.
See "The Master Servicer."
The Trust's principal offices will be in Wilmington, Delaware, in care of
Chase Manhattan Bank Delaware, as Owner Trustee, at 1201 Market Street,
Wilmington, Delaware 19801.
CAPITALIZATION
The Trust will initially be capitalized with equity equal to the Original
Certificate Balance. WII will purchase Certificates with an original Certificate
Balance of approximately 1% of the Original Certificate Balance and the
remaining Certificates will be sold to third party investors which are expected
to be unaffiliated with the Seller, the Master Servicer or the Trust.
The following table illustrates the capitalization of the Trust as of the
Cut-Off Date, as if the issuance and sale of the Securities had taken place on
that date:
<TABLE>
<S> <C>
Class A-1 Notes......................................... $224,100,000
Class A-2 Notes......................................... 149,425,000
Class A-3 Notes......................................... 73,975,000
Certificates............................................ 52,500,000
------------
Total......................................... $500,000,000
============
</TABLE>
12
<PAGE> 14
THE OWNER TRUSTEE
Chase Manhattan Bank Delaware will be the Owner Trustee under the Trust
Agreement. Chase Manhattan Bank Delaware is a Delaware corporation and its
Corporate Trust Office is located at 1201 Market Street, Wilmington, Delaware
19801.
The Owner Trustee will have the rights and duties set forth herein under
"Certain Information Regarding the Securities -- The Trustees" and "-- Duties of
the Trustees."
THE CONTRACTS POOL
Each Contract is a retail installment sales contract originated by a new or
used car dealer located in California or one of the other 42 states listed
below. Most of the Contracts were purchased by WFS, however, a limited number of
Contracts, no more than 1% of the Cut-Off Date Aggregate Scheduled Balance, are
installment loans originated by branch offices of WFS directly to consumers.
Each Contract is secured by a Financed Vehicle. Except as otherwise noted, all
references to contracts include installment loans.
WFS will select the Contracts from its portfolio of fixed-interest rate
retail installment sales contracts which are secured by new and used automobiles
or light-duty trucks. The Contracts were underwritten and purchased by WFS in
the ordinary course of its business operations. It is currently anticipated,
based on the Cut-Off Date Aggregate Scheduled Balance, that not less than
approximately 67.31% of the Contracts will have been originally underwritten as
prime contracts. Approximately 40.28% of the aggregate principal amount of the
Contracts will have been originated in California and approximately 59.72% of
the aggregate principal amount of the Contracts will have been originated in
states other than California. Each of the Contracts is fully amortizing and
provides for level payments over its term, with the portions of principal and
interest of each such level payment being determined on the basis of the Rule of
78's or the simple interest (actual number of days) method. The amortization of
the Rule of 78's Contracts will result in the outstanding principal balance on
each of those Contract being in excess of the Scheduled Balance of that
Contract. For purposes of the Trust, all Rule of 78's Contracts are amortized on
an actuarial basis to prevent shortfalls of principal payments on the
Securities. As amortization on an actuarial basis produces a faster amortization
than does application of the Rule of 78's, there will not be a shortfall of
principal in any event, including as a result of prepayments or timely payment
to maturity of a Rule of 78's Contract.
As of the Cut-Off Date, the aggregate outstanding principal amount of the
Contracts will be $500,000,000. Based on the anticipated Aggregate Scheduled
Balances of the Contracts as of the Cut-Off Date (the "Cut-Off Date Aggregate
Scheduled Balance") approximately 10.78% of the Contracts will be Rule of 78's
Contracts and approximately 89.22% will be Simple Interest Contracts.
The information concerning the Contracts presented in this Prospectus is
based upon a pool of retail installment sales contracts and installment loans
originated through September 30, 1999.
Approximately 25.41% of the aggregate principal amount of the Contracts
relate to the purchase of new vehicles and approximately 74.59% of the Contracts
relate to the purchase of used vehicles. Approximately 48.95% of the aggregate
principal amount of these Contracts consists of contracts secured by automobiles
and approximately 51.05% of the aggregate principal amount consists of contracts
secured by light-duty trucks. These Contracts have an annual percentage rate
("APR") of at least 5.90% and not more than 30.00%, and the weighted average APR
of these Contracts is approximately 14.77%. These Contracts have remaining
maturities of at least
13
<PAGE> 15
3 months but not more than 84 months and original maturities of at least 7
months but not more than 84 months. The weighted average original maturity of
these Contracts was 63 months and the weighted average remaining maturity of
these Contracts as of September 30, 1999 was 61 months. It is currently
anticipated that not more than 44.15% of the aggregate principal amount of the
Contracts (by Cut-Off Date Aggregate Scheduled Balance) will have had original
maturities of more than 60 months. The average principal amount outstanding per
Contract as of September 30, 1999 was $13,852.11 and the outstanding principal
balance of these Contracts as of September 30, 1999 ranged from $529.23 to
$53,051.98.
14
<PAGE> 16
DISTRIBUTION OF CONTRACTS BY APR(1)
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE CONTRACTS BALANCE BALANCES(2)
--------- --------- --------------- -------------
<S> <C> <C> <C>
5.000% to 5.999%.......................... 2 $ 25,345.33 0.01%
6.000% to 6.999%.......................... 31 488,589.24 0.10
7.000% to 7.999%.......................... 382 6,684,715.65 1.34
8.000% to 8.999%.......................... 1,135 19,204,551.09 3.84
9.000% to 9.999%.......................... 1,914 32,012,177.21 6.40
10.000% to 10.999%.......................... 2,383 39,012,446.95 7.80
11.000% to 11.999%.......................... 2,296 37,585,280.08 7.52
12.000% to 12.999%.......................... 3,082 47,904,887.09 9.58
13.000% to 13.999%.......................... 2,711 42,635,512.55 8.53
14.000% to 14.999%.......................... 3,139 46,597,595.49 9.32
15.000% to 15.999%.......................... 3,214 45,532,985.56 9.11
16.000% to 16.999%.......................... 2,861 39,518,647.46 7.90
17.000% to 17.999%.......................... 2,502 32,919,897.78 6.58
18.000% to 18.999%.......................... 2,707 33,281,105.86 6.66
19.000% to 19.999%.......................... 1,823 21,749,343.80 4.35
20.000% to 20.999%.......................... 2,901 29,559,754.46 5.91
21.000% to 21.999%.......................... 1,703 14,702,320.29 2.94
22.000% to 22.999%.......................... 345 3,443,540.42 0.69
23.000% to 23.999%.......................... 233 2,195,332.16 0.44
24.000% to 24.999%.......................... 306 2,319,439.07 0.46
25.000% to 25.999%.......................... 168 1,104,630.04 0.22
26.000% to 26.999%.......................... 66 471,921.24 0.09
27.000% to 27.999%.......................... 23 166,260.19 0.03
28.000% to 28.999%.......................... 11 92,325.70 0.02
29.000% to 29.999%.......................... 154 773,474.03 0.15
30.000% and over............................ 4 23,802.24 0.00
------ --------------- ------
Total.................................. 36,096 $500,005,880.98 100.00%
====== =============== ======
</TABLE>
- -------------------------
(1) Information as of September 30, 1999. Contracts having Cut-Off Date
Aggregate Scheduled Balances of $500,000,000 will be included in the Trust.
(2) Percentages may not add to 100.00% due to rounding.
15
<PAGE> 17
GEOGRAPHIC CONCENTRATION OF THE CONTRACTS(1)
<TABLE>
<CAPTION>
PERCENTAGE OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
STATE(2) CONTRACTS BALANCE BALANCES
-------- --------- --------------- -------------
<S> <C> <C> <C>
California..................................... 15,524 $201,394,085.46 40.28%
Arizona........................................ 2,093 29,396,560.07 5.88
Texas.......................................... 1,945 28,547,849.79 5.71
Washington..................................... 2,035 25,931,899.68 5.19
Florida........................................ 1,452 23,337,314.06 4.67
Oregon......................................... 1,497 17,736,762.69 3.55
Colorado....................................... 1,179 16,164,380.67 3.23
Ohio........................................... 1,177 15,705,914.82 3.14
Nevada......................................... 852 13,035,130.90 2.61
North Carolina................................. 739 11,722,664.77 2.34
Virginia....................................... 600 9,773,372.35 1.95
Illinois....................................... 574 9,357,943.37 1.87
South Carolina................................. 527 8,580,731.24 1.72
Alabama........................................ 461 7,783,317.75 1.56
Tennessee...................................... 425 7,690,242.42 1.54
Missouri....................................... 507 7,559,085.47 1.51
Utah........................................... 535 7,128,146.19 1.43
Georgia........................................ 371 6,391,990.56 1.28
Idaho.......................................... 448 5,392,642.03 1.08
Pennsylvania................................... 289 4,229,403.97 0.85
Maryland....................................... 226 3,916,314.39 0.78
Indiana........................................ 260 3,852,213.59 0.77
Kentucky....................................... 255 3,596,961.18 0.72
Michigan....................................... 241 3,517,930.14 0.70
Massachusetts.................................. 214 3,275,671.96 0.66
New Jersey..................................... 190 3,026,245.40 0.61
Wisconsin...................................... 220 2,807,597.76 0.56
Oklahoma....................................... 170 2,599,421.62 0.52
Connecticut.................................... 189 2,521,859.42 0.50
Kansas......................................... 135 2,504,552.62 0.50
Mississippi.................................... 141 2,409,340.52 0.48
New Mexico..................................... 167 2,281,075.61 0.46
Delaware....................................... 133 2,065,528.35 0.41
Iowa........................................... 71 1,121,619.34 0.22
West Virginia.................................. 59 1,052,948.42 0.21
Wyoming........................................ 56 823,464.44 0.16
Rhode Island................................... 41 497,036.26 0.10
New Hampshire.................................. 39 465,418.00 0.09
Hawaii......................................... 29 411,395.15 0.08
Maine.......................................... 10 150,788.68 0.03
Minnesota...................................... 7 90,482.21 0.02
New York....................................... 7 86,821.17 0.02
Nebraska....................................... 6 71,756.49 0.01
------ --------------- ------
Total..................................... 36,096 $500,005,880.98 100.00%
====== =============== ======
</TABLE>
- -------------------------
(1) Information as of September 30, 1999. Contracts having Cut-Off Date
Aggregate Scheduled Balances of $500,000,000 will be included in the Trust.
(2) Based upon the state in which the new or used car dealer which originated a
Contract is located, or in the case of an installment loan made by WFS, the
state in which the office of WFS which originated the loan is located.
16
<PAGE> 18
UNDERWRITING PROCEDURES RELATING TO THE CONTRACTS
WFS and its predecessors and affiliates have underwritten and purchased
motor vehicle installment sales contracts and installment loans (collectively,
"Contracts") since 1973. The discussion herein regarding contracts is applicable
to the Contracts and none of the Contracts included in the Trust Property will
have been underwritten under special financing programs. WFS purchases contracts
across the full spectrum of the prime and non-prime credit quality market. It
offers competitive rates commensurate with the risks inherent in its obligors'
ability to make payments under their contracts.
Substantially all contracts are nonrecourse to the originating dealer. In
the case of new vehicle contracts, the original amount financed does not exceed
the sum of the dealer's cost, taxes, license fees, service warranty cost and, if
applicable, premium for credit life or credit disability insurance, and in some
cases, miscellaneous costs. Over-advances (i.e., advances in excess of the
amount specified in the previous sentence) may be made under certain
circumstances to assist a dealer in selling an automobile or light duty truck by
permitting a lower down payment, and in some cases no down payment, based on the
creditworthiness of the applicant. For used vehicles, the amount financed does
not exceed the wholesale "blue book" value for the vehicle plus the related
expenses and the over-advances just described. WFS does not have a fixed maximum
amount financed as a percentage of the wholesale or retail value of the financed
vehicle. Any amount financed in excess of the wholesale value of the financed
vehicle is dependent upon the creditworthiness of the applicant. WFS believes
that, with respect to substantially all contracts, the total amount financed,
including any over-advance, does not exceed the retail value of the financed
vehicle.
Each contract is fully amortizing and provides for level payments over its
term with the portion of principal and interest of each level payment determined
generally on the basis of the sum of the digits (also known as the Rule of
78's), or on a simple interest basis otherwise. WFS does not have minimum
maturity requirements; however, contracts of less than three years maturity are
seldom purchased or made due to low customer demand.
WFS relies primarily on the judgment of its trained credit analysts who
evaluate the applicant's credit and stability, including income, employment and
housing, within the context of WFS' underwriting guidelines. WFS' credit
analysts are closely monitored by management and internal quality control
professionals to insure adherence to WFS' underwriting guidelines. The goal in
underwriting contracts is to correctly determine whether an applicant has the
ability and intention to perform on his or her obligations under the contract.
The formal underwriting process for either prime or non-prime contracts
begins when an application is received. Applications are faxed to one of two
processing centers where the system will collect credit data on applicants and
other information used in the underwriting process. The front-end application
processing system will arrange that information for review and analysis by
either a prime or non-prime credit analyst to whom the information will be
automatically queued.
Due to the credit history of some applicants, the credit analyst may
request that the data verification department verify information or seek
clarification of information learned during the review of the applicant's credit
history. Often, items in a credit history which may seem significant to another
financing source will not, upon investigation, preclude the applicant from
possessing the requisite ability and intent to perform on his or her
obligations. The application, credit history, and other relevant information are
then reviewed by the credit analyst for approval or denial. If the contract
amount or terms exceeds the credit analysts's approval authority, a senior
official with the requisite credit approval authority then reviews the
application. In order to maintain its competitive position in the marketplace,
WFS emphasizes a fast approval process and, under normal
17
<PAGE> 19
circumstances, will approve or deny the application the same day it is received.
When an application is approved, the submitting Dealer is notified. Upon the
Dealer's acceptance of WFS' approval, the contract is purchased.
Approximately one-third of all contracts purchased are reviewed by a senior
credit analyst, the quality control department of WFS or the reunderwriting
department of WFS to insure adherence to established lending guidelines and
compliance with proper documentation requirements.
18
<PAGE> 20
DELINQUENCY AND CONTRACT LOSS INFORMATION
The following tables set forth (i) the delinquency experience in regard to
contracts originated and serviced by WFS and its affiliates, including contracts
subsequently sold to WFS Financial Auto Loans, Inc. and WFS Financial Auto Loans
2, Inc. as of December 31, 1994 through 1998 and as of September 30, 1999 and
(ii) the loss experience for such contracts originated and serviced by WFS and
its affiliates, including contracts subsequently sold to WFS Financial Auto
Loans, Inc. and WFS Financial Auto Loans 2, Inc. for the years ended December
31, 1994 through 1998 and for the nine months ended September 30, 1999. There is
no assurance that the future delinquency and loss experience of the Contracts
will be similar to that set forth below. WFS defines delinquency as being past
due based on the contractual due date of the underlying contract.
CONTRACT DELINQUENCY EXPERIENCE (1)
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31, AT DECEMBER 31, AT DECEMBER 31,
1999 1998 1997 1996
------------------------ ------------------------ ------------------------ ------------------------
NUMBER NUMBER NUMBER NUMBER
OF AMOUNT OF AMOUNT OF AMOUNT OF AMOUNT
CONTRACTS (2) CONTRACTS (2) CONTRACTS (2) CONTRACTS (2)
----------- ---------- ----------- ---------- ----------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio............ 513,488 $5,152,194 464,257 $4,367,099 408,958 $3,680,817 341,486 $3,046,585
======= ========== ======= ========== ======= ========== ======= ==========
Period of
delinquency(3)
31-59 days.......... 11,283 $ 90,800 13,885 $ 112,208 6,605 $ 54,450 4,511 $ 38,173
60-89 days.......... 3,482 28,879 3,966 32,100 2,161 18,652 1,305 11,470
90 days or more..... 1,419 11,220 1,768 14,441 918 7,762 567 5,144
------- ---------- ------- ---------- ------- ---------- ------- ----------
Total contracts and
amount delinquent... 16,184 $ 130,899 19,619 $ 158,749 9,684 $ 80,864 6,383 $ 54,787
======= ========== ======= ========== ======= ========== ======= ==========
Delinquencies as a
percentage of number
and amount of
contracts
outstanding......... 3.15% 2.54% 4.23% 3.64% 2.37% 2.20% 1.87% 1.80%
======= ========== ======= ========== ======= ========== ======= ==========
<CAPTION>
AT DECEMBER 31, AT DECEMBER 31,
1995 1994
------------------------ ------------------------
NUMBER NUMBER
OF AMOUNT OF AMOUNT
CONTRACTS (2) CONTRACTS (2)
----------- ---------- ----------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Portfolio............ 258,665 $2,209,594 201,957 $1,633,177
======= ========== ======= ==========
Period of
delinquency(3)
31-59 days.......... 2,180 $ 18,557 1,136 $ 8,510
60-89 days.......... 690 6,143 336 2,616
90 days or more..... 308 2,701 145 998
------- ---------- ------- ----------
Total contracts and
amount delinquent... 3,178 $ 27,401 1,617 $ 12,124
======= ========== ======= ==========
Delinquencies as a
percentage of number
and amount of
contracts
outstanding......... 1.23% 1.24% 0.80% 0.74%
======= ========== ======= ==========
</TABLE>
- ---------------
(1) Includes delinquency information relating to those contracts that are owned
by WFS and contracts that were sold to a grantor or owner trust but which
are serviced by WFS.
(2) This amount is net of unearned add-on interest.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
19
<PAGE> 21
CONTRACT LOSS EXPERIENCE (1)
<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, --------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
------------- ------------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Portfolio
At end of period (net of
unearned add-on interest).... $5,152,194 $4,246,814 $4,367,099 $3,680,817 $3,046,585 $2,209,594 $1,633,177
========== ========== ========== ========== ========== ========== ==========
Average during period (net of
unearned add-on interest).... $4,701,213 $3,935,742 $4,006,185 $3,383,570 $2,627,622 $1,886,359 $1,438,582
========== ========== ========== ========== ========== ========== ==========
Gross chargeoffs of contracts
during period................ $ 106,661 $ 124,901 $ 173,422 $ 136,773 $ 86,464 $ 48,999 $ 27,620
Recoveries during period of
contracts charged off........ 35,705 26,196 36,230 34,634 25,946 18,715 11,927
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net chargeoffs................. $ 70,956 $ 98,705 $ 137,192 $ 102,139 $ 60,518 $ 30,284 $ 15,693
========== ========== ========== ========== ========== ========== ==========
Net chargeoffs as a percentage
of contracts outstanding
during period................ 2.01% 3.34% 3.42% 3.02% 2.30% 1.61% 1.09%
</TABLE>
- ---------------
(1) Includes loss information for contracts that are owned by WFS and contracts
that were sold to a grantor or owner trust but which are serviced by WFS. It
is the policy of WFS to charge-off all contracts when they become 120 days
delinquent, whether such contract is owned by WFS or serviced by WFS for
others. WFS believes that its charge-off policy is consistent with that
customarily used in the automobile finance industry.
Net charge-offs as a percentage of contracts outstanding for contracts
originated and serviced by WFS decreased in the nine months ended September 30,
1999 to 2.01%, a 41.23% decrease over the 3.42% experienced in 1998 following a
13.25% increase over the 3.02% net charge-off level experienced in 1997.
Delinquencies, as a percentage of amount of contracts outstanding increased from
2.20% at year end 1997 to 3.64% at year end 1998 and decreased to 2.54% at
September 30, 1999, an increase of 65.45% and decrease of 30.22%, respectively.
Loss and delinquency experience during 1998 and 1997 for contracts originated
and serviced by WFS was impacted by a variety of factors including an increase
in the percentage of the outstanding contracts which were originally
underwritten in 1997 and 1998 as non-prime contracts, an increase in the number
of personal bankruptcy filings and general economic conditions. Loss and
delinquency experience in 1998 was also impacted by a disruption of collection
efforts arising from WFS' restructuring of its offices throughout the United
States and the continued transitory effect of moving post-repossession
collection efforts to recently created centralized asset recovery and vehicle
recovery centers. The decrease in loss and delinquency experience for the first
nine months in 1999 resulted from an increase in the origination of contracts
originally underwritten as prime contracts and completion of WFS' restructuring
efforts. As the characteristics of the Contracts may be different than that of
the entire portfolio of contracts originated and serviced by WFS, no assurances
can be given that the performance of the Contracts will be similar.
20
<PAGE> 22
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each Class of Notes will be a six-digit decimal
which the Master Servicer will compute prior to each Distribution Date
indicating the unpaid principal amount of each Class of Notes, after giving
effect to payments to be made on that Distribution Date, as a fraction of the
initial outstanding principal amount of that Class of Notes. The "Certificate
Pool Factor" for the Certificates will be a six-digit decimal which the Master
Servicer will compute prior to each Distribution Date indicating the remaining
Certificate Balance, after giving effect to distributions to be made on that
Distribution Date, as a fraction of the Original Certificate Balance. Each Note
Pool Factor and the Certificate Pool Factor will be 1.000000 as of the Closing
Date, and thereafter will decline to reflect reductions in the outstanding
principal amount of the applicable Class of Notes, or the reduction of the
Certificate Balance, as the case may be. A Noteholder's portion of the aggregate
outstanding principal amount of the related Class of Notes will be the product
of (i) the original denomination of such Noteholder's Note and (ii) the
applicable Note Pool Factor at the time of determination. A Certificateholder's
portion of the aggregate outstanding Certificate Balance will be the product of:
(i) the original denomination of such Certificateholder's Certificate and (ii)
the Certificate Pool Factor at the time of determination.
The Noteholders will receive reports on or about each Distribution Date
concerning payments received on the Contracts, the Pool Balance, each Note Pool
Factor and various other items of information, and the Certificateholders will
receive reports on or about each Distribution Date concerning payments received
on the Contracts, the Aggregate Scheduled Balance, the Certificate Pool Factor
and various other items of information. In addition, Securityholders of record
during any calendar year will be furnished information for tax reporting
purposes not later than the latest date permitted by law. See "Certain
Information Regarding the Securities -- Statements to Securityholders."
USE OF PROCEEDS
The Seller will apply the net proceeds from the sale of the Securities
(i.e., the proceeds of the public offering of the Securities minus expenses
relating thereto) to the purchase of the Contracts from WFS.
THE NOTES
GENERAL
The Notes will be issued pursuant an indenture to be dated as of November
1, 1999 (the "Indenture"), a form of which has been filed as an exhibit to the
Registration Statement. You can obtain a copy of the Indenture (without
exhibits) by writing to the Indenture Trustee at its Corporate Trust Office. The
following summary and the information contained under "Certain Information
Regarding the Securities" describes the material terms of the Indenture and the
Notes. You should, however, review the provisions of the Notes and the Indenture
along with the following summary in order to have more complete information.
Where particular provisions or terms used in the Notes or the Indenture are
referred to, the actual provisions of such documents (including definitions of
terms) are incorporated by reference as part of such summaries.
Distributions of interest and principal on the Securities will be made on
January 20, April 20, July 20 and October 20 of each year (or, if any such day
is not a Business Day, on the next succeeding Business Day) (each, a
"Distribution Date"), commencing January 20, 2000. Payments on the Securities on
each Distribution Date will be paid to the holders of record of the related
21
<PAGE> 23
Securities on the Business Day immediately proceeding such Distribution Date or,
in the event that Definitive Securities are issued, as of the 15(th) day of the
month immediately proceeding the month in which such Distribution Date occurs
(each, a "Record Date").
A "Business Day" will be any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, Wilmington, Delaware or Los
Angeles, California are authorized or obligated by law, executive order or
government decree to be closed.
PAYMENTS OF INTEREST
Interest on the outstanding principal amount of each Class of Notes will
accrue at the applicable Interest Rate and will be payable to the Noteholders of
each Class on each Distribution Date. Interest on the Class A-1 Notes will be
calculated on the basis of the actual days elapsed in an Interest Period and a
360-day year. Interest on the Class A-2 and Class A-3 Notes will be calculated
on the basis of a 360-day year consisting of twelve 30-day months. Interest
accrued but not paid on any Distribution Date will be due on the immediately
succeeding Distribution Date, together with, to the extent permitted by
applicable law, interest on that unpaid interest at the related Interest Rate.
An "Interest Period" with respect to any Distribution Date will be the period
from and including the most recent Distribution Date on which interest has been
paid (or from and including the Cut-Off Date with respect to the first
Distribution Date) to but excluding the current Distribution Date. Interest
payments on the Notes will be made from Net Collections after all accrued and
unpaid Trustees' fees and other administrative fees of the Trust and payment of
all applicable servicing compensation to the Master Servicer (collectively,
"Trust Fees and Expenses") have been paid. See "Certain Information Regarding
the Securities -- Distributions on the Securities -- Deposits to the
Distribution Accounts; Priority of Payments."
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders, to the extent described
below, on each Distribution Date in an amount equal to the Note Percentage of
the related Principal Distributable Amount, in each case calculated as described
under "Certain Information Regarding the Securities -- Distributions on the
Securities -- Deposits to the Distribution Accounts; Priority of Payments."
Principal payments on the Notes will be made from Net Collections after all
Trust Fees and Expenses have been paid, and after the Note Interest
Distributable Amount has been distributed. See "Certain Information Regarding
the Securities -- Distributions on the Securities -- Deposits to the
Distribution Accounts; Priority of Payments."
We will make principal payments on the Notes on each Distribution Date from
the Note Distribution Account in the following order:
(1) to the Class A-1 Notes until the principal amount of the Class A-1
Notes has been reduced to zero;
(2) to the Class A-2 Notes until the principal amount of the Class A-2
Notes has been reduced to zero; and
(3) to the Class A-3 Notes until the principal amount of the Class A-3
Notes has been reduced to zero.
To the extent not previously paid prior to such dates, the outstanding
principal amount of (i) the Class A-1 Notes will be payable on July 20, 2002
(the "Class A-1 Final Distribution Date"), (ii) the Class A-2 Notes will be
payable on January 20, 2004 (the "Class A-2 Final Distribution Date") and (iii)
the Class A-3 Notes will be payable on October 20, 2004 (the "Class A-3 Final
Distribution
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Date" and, together with the Class A-1 Final Distribution Date and the Class A-2
Final Distribution Date, the "Note Final Distribution Dates"). The Note Final
Distribution Date for a Class of Notes represents the last day on which the
outstanding principal amount of the related Notes will be paid. In no event may
the principal paid in respect of a Class of Notes exceed the unpaid principal
balance of that Class of Notes. No amount of principal will be paid on the
Certificates until the principal amount of all Classes of Notes has been reduced
to zero. See "Certain Information Regarding the Securities -- Payment Priorities
of the Notes and Certificates; The Spread Account" and "Certain Legal Aspects of
the Contracts -- Repurchase Obligations, The Seller -- Breach of Representations
and Warranties; Defective Contract Documentation."
The actual date on which the outstanding principal amount of any Class of
Notes is paid may be earlier than its Note Final Distribution Date based on a
variety of factors, including the factors described under "Certain Information
Regarding the Securities -- Prepayment Considerations."
OPTIONAL REDEMPTION
Each Class of outstanding Notes will be subject to redemption in whole, but
not in part, on any Distribution Date on which an Optional Purchase occurs. An
"Optional Purchase" may occur on any Distribution Date at which the aggregate
principal balance of the Simple Interest Contracts plus the aggregate of the
present value of the remaining monthly principal and interest due on the Rule of
78's Contracts owned by the Trust is equal to or less than $50,000,000. The
actual redemption price will equal the unpaid principal amount of that Class of
Notes plus accrued interest on that amount at the applicable Interest Rate.
THE INDENTURE TRUSTEE
Bankers Trust Company will be the Indenture Trustee. The Indenture Trustee
is a New York corporation and its Corporate Trust Office is located at Four
Albany Street, New York, New York 10006.
The Indenture Trustee will have the rights and duties set forth under
"Certain Information Regarding the Securities -- The Trustees" and "-- Duties of
the Trustees."
EVENTS OF DEFAULT
It is an "Event of Default" under the Indenture if:
(1) the Trust fails to pay any interest on the Notes of any Class within 5
days after the interest payment becomes due and payable;
(2) the Trust fails to pay any principal of the Notes of any Class when it
becomes due and payable;
(3) the Indenture Trustee notifies the Trust, or if the Holders of Notes
evidencing at least 25% of the voting interest of all the Notes
notifies the Trust or the Indenture Trustee, that one of the following
events has occurred, and continues for a period of 30 days after the
notice is given;
- the Trust fails to observe or perform any covenant or agreement it
made in the Indenture;
- the representations or warranties made by the Trust in the Indenture
or in any certificate delivered pursuant to or in connection with the
Indenture was incorrect in a material respect at the time it was
made; or
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(4) certain events of bankruptcy, insolvency, receivership or liquidation
relating to the Trust occur (each, a "Trust Insolvency").
Upon the occurrence of an Event of Default:
(1) If an Insurer Default has not occurred or is not continuing, Financial
Security can (in addition to its obligation to make Scheduled Payments
on the Notes in accordance with the terms of the Note Policy), but it
is not obligated to, elect to:
- subject to the limitations listed below, first accelerate the
principal of the Notes and then cause the Master Servicer or the
Trustee to sell or otherwise liquidate all or part of the property of
the Trust, in whole or in part on any date or dates following such
acceleration as Financial Security, in its sole discretion, shall
elect, and finally to deliver the proceeds to the Indenture Trustee
to distribute in accordance with the terms of the Note Policy.
(2) If an Insurer Default has occurred and is continuing, the Trustee may,
or if requested in writing by holders of at least 66 2/3% of the voting
interests of all the Notes, shall:
- subject to the limitations listed below, declare the Notes due and
payable at par, together with accrued interest on the Notes.
(3) Notwithstanding any of the foregoing, upon the occurrence of a Trust
Insolvency, if an Insurer Default has occurred and is continuing:
- subject to the limitations listed below, the Notes will become
immediately due and payable at par, together with accrued interest on
the Notes.
(4) No sale or liquidation of the property of the Trust pursuant to the
above provisions may occur if the proceeds from the sale or liquidation
are not sufficient to pay all of the outstanding principal and accrued
interest on the Notes; unless:
- an Insurer Default has not occurred or is not continuing and the
related Event of Default arose as described in clauses (1), (2) or
(4) of the first paragraph of this Events of Default Section; or
- an Insurer Default has occurred and is continuing and:
(i) holders of 100% of the voting interests of all the Notes consent
to such sale or liquidation; or
(ii) the Trustee determines that the property of the Trust will not
continue to provide sufficient funds for the payment of the
principal of and interest on the Notes, the Trustee provides
prior written notice of that sale or liquidation to each Rating
Agency, and holder of at least 66 2/3% of the voting interests
of all the Notes consent to that sale or liquidation.
It is an "Insurer Default" if:
(1) Financial Security fails to perform any of its obligations under the
Note Policy or the Certificate Policy; or
(2) certain events of bankruptcy, insolvency, receivership or liquidation
relating to Financial Security occur.
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Further, in the event that an Insurer Default has not occurred or is not
continuing, following the occurrence of an Event of Default, if Financial
Security has not elected to accelerate the principal of the Notes and such Event
of Default is subsequently cured, Financial Security shall not thereafter have
the right to elect to accelerate the principal of the Notes or to cause the
property of the Trust to be sold or liquidated by reason of that Event of
Default and the rights of all parties shall thereupon be restored as though that
Event of Default had not occurred.
Following the occurrence of an Event of Default and provided that (i) an
Insurer Default has not occurred or is not continuing and (ii) Financial
Security has not elected to accelerate the principal of the Notes, the Indenture
Trustee and the Owner Trustee will continue to submit claims under the Policies
for any shortfalls in Scheduled Payments on the Notes and Guaranteed
Distributions on the Certificates, respectively. See "The Policies."
THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the Trust Agreement, a form of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. You can obtain a copy of the Trust Agreement (without
exhibits) by writing to the Owner Trustee at its Corporate Trust Office. The
following summary and the information contained in this prospectus under the
caption "Certain Information Regarding The Securities" describes the material
terms of the Certificates and the Trust Agreement. You should, however, review
the provisions of the Certificates and the Trust Agreement along with the
following summary in order to have more complete information. Where particular
provisions or terms used in the Trust Agreement are referred to, the actual
provisions (including definitions of terms and Section references) are
incorporated by reference as part of such summaries.
Distributions on the Certificates will be subordinated to payments of
interest and principal on the Notes as described in this section and under
"Certain Information Regarding the Securities -- Distributions on the
Securities."
DISTRIBUTIONS OF INTEREST
On each Distribution Date, the Owner Trustee or any Paying Agent will
distribute pro rata to Certificateholders of record as of the related Record
Date accrued interest at the rate of % per annum (the "Pass-Through Rate") on
the Certificate Balance as of the immediately preceding Distribution Date (after
giving effect to distributions of principal made on the immediately preceding
Distribution Date) or, in the case of the first Distribution Date, on the
Original Certificate Balance. Interest in respect of a Distribution Date will
accrue from and including the Cut-Off Date (in the case of the first
Distribution Date), or from and including the most recent Distribution Date to
which interest has been paid, but excluding the current Distribution Date.
Interest accrued but not paid on any Distribution Date will be due on the
immediately succeeding Distribution Date, together with, to the extent permitted
by applicable law, interest on that amount at the Pass-Through Rate. Interest
distributions with respect to the Certificates will be made from Net Collections
after all Trust Fees and Expenses have been paid and after the Note
Distributable Amount has been distributed. See "Certain Information Regarding
the Securities -- Distributions on the Securities -- Deposits to the
Distribution Accounts; Priority of Payments."
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The "Certificate Balance" will equal $52,500,000 (the "Original Certificate
Balance") on the Closing Date and on any date thereafter will equal the Original
Certificate Balance reduced by all distributions of principal previously made in
respect of the Certificates.
DISTRIBUTIONS OF PRINCIPAL
No principal will be paid on the Certificates until the Distribution Date
on which the principal amount of all Classes of Notes has been reduced to zero.
On that Distribution Date and each Distribution Date thereafter, the
Certificateholders will be entitled to distributions in an amount equal to the
Certificate Percentage of the Principal Distributable Amount, in each case
calculated as described under "Certain Information Regarding the
Securities -- Distributions on the Securities -- Deposits to the Distribution
Accounts; Priority of Payments." Distributions with respect to principal
payments will be made from Net Collections after all Trust Fees and Expenses
have been paid and after the Note Distributable Amount and the Certificate
Interest Distributable Amount have been distributed. See "Certain Information
Regarding the Securities -- Distributions on the Securities -- Deposits to the
Distribution Accounts; Priority of Payments."
To the extent not previously paid prior to such date, the unpaid principal
balance of the Certificates will be payable on January 20, 2007 (the
"Certificate Final Distribution Date" and, together with the Note Final
Distribution Dates, the "Final Distribution Dates").
The actual date on which the Certificate Balance is reduced to zero may be
earlier than the Certificate Final Distribution Date based on a variety of
factors, including:
(a) the Seller's right or obligation to repurchase the Contracts:
- on any Distribution Date as of which the Aggregate Scheduled Balance
is less than 10% of the Cut-Off Date Aggregate Scheduled Balance; or
- because of certain material defects in Contract documentation or due
to breaches of its representations or warranties, in either case
that materially or adversely affect the interests of the
Securityholders, the Indenture Trustee, the Owner Trustee or
Financial Security;
or
(b) purchases by the Master Servicer of Contracts due to certain breaches
of representations and warranties made by the Master Servicer or due to
certain breaches by the Master Servicer in servicing procedures, in
either case that materially and adversely affect the Contracts.
Any repurchase or purchase may reduce the average life of the Contracts.
See "Certain Information Regarding the Securities -- Prepayment Considerations."
OPTIONAL PREPAYMENT
The Certificates will be subject to prepayment in whole, but not in part,
on any Distribution Date on which an Optional Purchase occurs. An Optional
Prepayment may be made on any Distribution Date at which the aggregate principal
balance of the Simple Interest Contracts plus the aggregate of the present value
of the remaining monthly principal and interest due on the Rule of 78's
Contracts owned by the Trust is equal to or less than $50,000,000.
Certificateholders will receive an amount for their Certificates equal to the
Certificate Balance, together with accrued interest at the Pass-Through Rate
through such date. An Optional Purchase will effect early retirement of the
Certificates. See "Certain Information Regarding the Securities -- Termination."
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MANDATORY PREPAYMENT
As more fully described under "The Notes -- Events of Default," upon the
occurrence of an Event of Default (so long as an Insurer Default has not
occurred and is not continuing), Financial Security will have the right, but not
the obligation, to cause all or any part of the property of the Trust to be sold
or liquidated and shall select the date(s) for that sale or liquidation. That
date, however, must be prior to the date on which the Event of Default is cured.
Any such sale or liquidation may cause a full or partial prepayment of the
Certificates.
PAYING AGENTS
Distributions of principal of and interest on the Certificates will be made
by the Owner Trustee or any paying agent as the Owner Trustee may designate from
time to time (the "Paying Agent"). The Chase Manhattan Bank, N.A. will be
designated as the initial Paying Agent with respect to the Certificates.
CERTAIN INFORMATION REGARDING THE SECURITIES
BOOK-ENTRY REGISTRATION
The Depository Trust Company ("DTC"), New York, New York, will act as
securities depository for the Securities. Each Class of Notes and the
Certificates will be issued as fully registered securities registered in the
name of Cede & Co. ("Cede"), the nominee of DTC. It is anticipated that the only
Noteholders or Certificateholders, as the case may be, will be Cede, as nominee
of DTC. Owners of Notes will not be recognized by the Indenture Trustee as
"Noteholders," as such term will be used in the Indenture. Owners of
Certificates will not be recognized by the Owner Trustee as
"Certificateholders," as such term will be used in the Trust Agreement. Owners
of Securities will only be permitted to exercise the rights of Securityholders
indirectly through DTC and its Participants, as further described below.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the Uniform Commercial Code in effect in the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). DTC
was created to hold securities for its participating members ("Participants")
and to facilitate the clearance and settlement of securities transactions
between Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers (including the
Underwriters), banks, trust companies and clearing corporations. Indirect access
to the DTC system also is available to banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly (the "Indirect Participants"). The
rules applicable to DTC and its Participants are on file with the Securities and
Exchange Commission.
Owners of Securities that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or an interest in,
Securities may do so only through Participants and Indirect Participants.
Participants will receive a credit for the related Securities on DTC's records.
The ownership interest of each Owner of Securities will in turn be recorded on
the respective records of Participants and Indirect Participants. Owners of
Securities will not receive written confirmation from DTC of their purchase, but
Owners of Securities are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
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from the Participant or Indirect Participant through which the Owner of
Securities entered into the transaction. Transfers of ownership interests in the
Securities will be accomplished by entries made on the books of Participants
acting on behalf of Owners of Securities.
To facilitate subsequent transfers, all Securities deposited by
Participants with DTC will be registered in the name of Cede, as nominee of DTC.
The deposit of Securities with DTC and their registration in the name of Cede
will not change beneficial ownership. DTC will have no knowledge of the actual
Owners of Securities and its records will reflect only the identity of the
Participants to whose accounts such Securities are credited, which may or may
not be the ultimate Owners of Securities. Participants and Indirect Participants
will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Owners of Securities will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time.
DTC's practice is to credit Participants' accounts on each Distribution
Date in accordance with their respective holdings of Securities as shown on
DTC's records unless DTC has reason to believe that it will not receive payment
on such Distribution Date. Payments by Participants and Indirect Participants to
Owners of Securities will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant or Indirect Participant and not of DTC, the Indenture Trustee,
the Owner Trustee, Financial Security or the Seller, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
principal of and interest on the Securities to DTC will be the responsibility of
the related Trustee, disbursement of such payments to Participants will be the
responsibility of DTC and disbursement of such payments to Owners of Securities
will be the responsibility of Participants and Indirect Participants. As a
result, under the book-entry format, Owners of Securities may experience some
delay in their receipt of payments. DTC will forward such payments to its
Participants which thereafter will forward them to Indirect Participants or
Security Owners.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of an Owner of
Securities to pledge Securities to persons or entities that do not participate
in the DTC system, or otherwise take actions with respect to such Securities,
may be limited due to the lack of a physical certificate for such Securities.
Neither DTC nor Cede will consent or vote with respect to the Securities.
Under its usual procedures, DTC will mail an "Omnibus Proxy" to the Indenture
Trustee or the Owner Trustee, as the case may be, as soon as possible after each
applicable record date for such a consent or vote. The Omnibus Proxy will assign
Cede's consenting or voting rights to those Participants to whose accounts the
related Securities will be credited on that record date (identified in a listing
attached to the Omnibus Proxy).
None of the Master Servicer, the Seller, Financial Security, the Indenture
Trustee or the Owner Trustee will have any liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of the Securities held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DTC'S YEAR 2000 EFFORTS
DTC management is aware that some computer applications, systems, and the
like for processing data ("Systems") that are dependent upon calendar dates,
including dates before, on, and after
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January 1, 2000, may encounter "Year 2000 Problems." DTC has informed its
Participants and other members of the financial community that it has developed
and is implementing a program so that its Systems, as the same relate to the
timely payment of distributions (including principal and income payments) to
securityholders, book-entry deliveries, and settlement of trades within DTC
("DTC Services"), continue to function appropriately. This program includes a
technical assessment and a remediation plan, each of which is complete.
Additionally, DTC's plan includes a testing phase, which is expected to be
completed within appropriate time frames.
However, DTC's ability to perform properly its services is also dependent
upon other parties, including but not limited to issuers and their agents, as
well as third party vendors from whom DTC licenses software and hardware, and
third party vendors on whom DTC relies for information of the provision of
services, including telecommunication and electrical utility service providers,
among others. DTC has indicated that it is contacting (and will continue to
contact) third party vendors from whom DTC acquires services to: (i) impress
upon them the importance of such services being Year 2000 compliant; and (ii)
determine the extent of their efforts for Year 2000 remediation (and, as
appropriate, testing) of their services. In addition, DTC is in the process of
developing such contingency plans as it deems appropriate.
According to DTC, the foregoing information with respect to DTC has been
provided for informational purposes only and is not intended to serve as a
representation, warranty, or contract modification of any kind.
DEFINITIVE SECURITIES
Definitive Securities representing any Class of Notes or the Certificates
will be issued to the related Owners of Securities rather than to DTC, only if
- DTC is no longer willing or able to discharge its responsibilities as
depository with respect to the Securities, and neither the Indenture
Trustee nor the Owner Trustee, as the case may be, nor the Administrator
is able to locate a qualified successor,
- the Administrator, at its option, elects to terminate the book-entry
system with respect to the related Securities through DTC or
- after an Event of Default or Servicer Default, Security Owners evidencing
51% or more of the voting interests of the related Securities advise the
related Trustee through DTC and its Participants in writing that the
continuation of a book-entry system through DTC or its successor is no
longer in the best interests of the related Owners of Securities.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Owner Trustee or Indenture Trustee, as the case may be,
will be required to notify the related Owners of Securities, through
Participants, of the availability through DTC of Definitive Securities. Upon
surrender by DTC of the certificates representing all Securities of any affected
Class and the receipt of instructions for re-registration, such Trustee will
issue Definitive Securities to the related Owners of Securities, who thereupon
will become Noteholders or Certificateholders, as the case may be, for all
purposes of the Indenture or the Trust Agreement, respectively.
Distributions on the Definitive Securities will thereafter be made by the
related Trustee directly to holders of such Definitive Securities in accordance
with the procedures described herein and to be set forth in the Indenture and
the Trust Agreement. Interest payments and any principal payments on the
Securities on each Distribution Date will be made to holders in whose names the
Definitive Securities were registered at the close of business on the Record
Date with respect to such Distribution Date. Distributions will be made by check
mailed to the address of such holders as they
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appear on the register specified in the Trust Agreement or the Indenture, as the
case may be. The final payment on any Securities (whether Definitive Securities
or Securities registered in the name of Cede), however, will be made only upon
presentation and surrender of such Securities at the office or agency specified
in the notice of final distribution to Securityholders. The Owner Trustee or the
Indenture Trustee will mail such notice to registered Securityholders within
five Business Days of receipt from the Master Servicer of notice of termination
of the Trust.
Definitive Securities will be transferable and exchangeable at the offices
of the Owner Trustee or the Indenture Trustee (or any security registrar
appointed thereby), as will be set forth in the Trust Agreement or the
Indenture, as the case may be. No service charge will be imposed for any
registration of transfer or exchange, but such Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith.
PAYMENTS ON THE CONTRACTS
All Net Collections on or in respect of the Contracts will be deposited in
or credited to the Collection Account or, in limited instances, the Holding
Account described under "Certain Information Regarding the Securities -- The
Accounts and Eligible Investments." "Net Collections" will include all payments
received by the Master Servicer on or in respect of the Contracts due on or
after the Cut-Off Date, net of late payments in respect of which the Master
Servicer has previously made an Advance or reimbursement to the Master Servicer
for Nonrecoverable Advances. Net Collections will include:
(a) prepayments, Net Liquidation Proceeds and Net Insurance Proceeds;
(b) any amounts deposited in the Collection Account by:
- the Seller to purchase Contracts or
- the Master Servicer to purchase Contracts; and
(c) any Advances that may be made by the Master Servicer in respect of
delinquent Contracts.
"Net Liquidation Proceeds" will be proceeds received by the Master Servicer
(net of Liquidation Expenses) upon liquidation of any Defaulted Contract.
"Liquidation Expenses" will be the reasonable out-of-pocket expenses (exclusive
of overhead expenses) incurred by the Master Servicer in realizing upon a
defaulted Contract. "Net Insurance Proceeds" will be proceeds paid by any
insurer under a comprehensive and collision or limited dual interest insurance
related to a Contract (other than funds used for the repair of the related
Financed Vehicle or otherwise released to the related Obligor in accordance with
normal servicing procedures), after reimbursement to the Master Servicer of
expenses recoverable under such insurance policy.
Subject to the remainder of this paragraph, distributions on the Securities
will be made on each Distribution Date out of Net Collections for the related
Due Period plus certain reinvestment earnings on Eligible Investments and any
Advance made by the Master Servicer as described under "The Master
Servicer -- Advances." The amount of those Net Collections, reinvestment
earnings and Advances on each Distribution Date will be applied as described
under "Certain Information Regarding the Securities -- Distributions on the
Securities." Amounts, to the extent available, will be withdrawn from the Spread
Account to cover any shortfalls in distributions to Securityholders. Under the
Policies, Financial Security will be obligated to provide for distribution on
the Securities on each Distribution Date the amount, if any, by which the amount
of Net Collections and funds available in the Spread Account is less than the
sum of the interest and principal due on the Securities for that Distribution
Date and will be obligated to provide for the payment of Scheduled Payments on
the
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Notes on the respective Note Final Distribution Dates and Guaranteed
Distributions on the Certificates on the Certificate Final Distribution Date.
THE ACCOUNTS AND ELIGIBLE INVESTMENTS
General. All net collections received by the Master Servicer on or in
respect of the Contracts and any Advances made by the Master Servicer will be
deposited in or credited to the Collection Account or, in certain limited
instances, the Holding Account. All amounts paid under the Policies will be
solely deposited in or credited to the Collection Account. On each Distribution
Date, the Indenture Trustee will distribute the amounts on deposit in the
Collection Account with respect to such Distribution Date to the Note
Distribution Account and, to the extent applicable, the Certificate Distribution
Account. All payments to Noteholders will be made from the Note Distribution
Account and to Certificateholders from the Certificate Distribution Account.
The Collection Account. The Master Servicer will cause all collections made
on or in respect of the Contracts during a Due Period (other than amounts to be
deposited in the Holding Account as described below) to be deposited in or
credited to an account (the "Collection Account") to be established by the
Master Servicer under the Sale and Servicing Agreement. The collections
deposited will be net of late payments in respect of which the Master Servicer
has previously made an Advance and reimbursements to it for Nonrecoverable
Advances. The Collection Account may, upon prior written approval of Financial
Security, be an uninsured general ledger account or a deposit account at the
Bank. Funds in the Collection Account will be invested in a reinvestment
contract (the "Reinvestment Contract") under which the Bank and WFS Financial
Auto Loans 2, Inc., a subsidiary of WFS, will be the obligors, so long as the
Reinvestment Contract is an Eligible Investment as described below. The
reinvestment earnings on the Reinvestment Contract for each Distribution Date
will be equal to the amount, if any, by which the related payment of interest
for that Distribution Date exceeds the aggregate amount of interest (adjusted to
the Pass-Through Rate) accrued on the Contracts during the related Due Period.
If the Reinvestment Contract does not qualify as an Eligible Investment, the
Indenture Trustee shall invest the funds on deposit in the Collection Account in
one or more other Eligible Investment or Investments. Payments under the
Reinvestment Contract will be deposited in the Collection Account no later than
the Business Day immediately preceding each Distribution Date.
If an Event of Default under the Sale and Servicing Agreement has occurred
and is continuing, funds in the Collection Account eligible to be invested in
Eligible Investments will be invested at the direction of the Indenture Trustee.
"Eligible Investments" will be specified in the Sale and Servicing Agreement and
will be limited to investments which meet the criteria of the Rating Agencies as
being consistent with their then-current ratings of the Securities. All income
or other gain from such investments will be promptly deposited in, and any loss
resulting from such investments shall be charged to, the Collection Account.
The Distribution Accounts. The Master Servicer will establish and maintain
with the Indenture Trustee (i) an account, in the name of the Indenture Trustee
on behalf of the Noteholders, in which amounts released from the Collection
Account for distribution to Noteholders will be deposited and from which all
distributions to Noteholders will be made (the "Note Distribution Account") and
(ii) an account, in the name of the Owner Trustee on behalf of the
Certificateholders, in which amounts released from the Collection Account for
distribution to Certificateholders will be deposited and from which all
distributions to Certificateholders will be made (the "Certificate Distribution
Account" and, together with the Note Distribution Account, the "Distribution
Accounts").
The Holding Account. The Master Servicer will establish an account (the
"Holding Account") into which it will deposit during each Due Period payments on
Rule of 78's Contracts that are due in
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one or more subsequent Due Periods. Funds in the Holding Account due in the next
Due Period will be transferred to the Collection Account immediately after the
next succeeding Distribution Date.
DISTRIBUTIONS ON THE SECURITIES
General. On or before the fifth Business Day prior to each Distribution
Date (each such date, a "Determination Date"), the Master Servicer will deliver
to the Indenture Trustee, the Owner Trustee, Financial Security and the Rating
Agencies a statement (the "Distribution Date Statement") setting forth, among
other things, the following amounts with respect to the related Due Period and
such Distribution Date:
- the amount of funds in the Collection Account allocable to collections on
the Contracts in the related Due Period (excluding any Advances and
Repurchase Amounts);
- the amount required to repurchase all Contracts repurchased by the Seller
or the Master Servicer during the related Due Period;
- the Advances made by the Master Servicer and the amounts for which the
Master Servicer is entitled to be reimbursed for unreimbursed Advances;
- the amount of Net Collections;
- the Note Interest Distributable Amount;
- the Note Principal Distributable Amount;
- the Certificate Interest Distributable Amount;
- the Certificate Principal Distributable Amount; and
- the Servicing Fee.
Deposits to the Distribution Accounts; Priority of Payments. On each
Distribution Date, the Master Servicer will allocate amounts on deposit in the
Collection Account with respect to the related Due Period and that Distribution
Date as described below and will instruct the Indenture Trustee to make the
following deposits and distributions in the following amounts and order of
priority (in each case after giving effect to all deposits and distributions of
higher priority):
(1) to the Master Servicer, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Due Periods;
(2) to the Indenture Trustee and the Owner Trustee, any accrued and
unpaid Trustees' fees;
(3) to the Note Distribution Account, from Net Collections (after
giving effect to the reduction in Net Collections described in clauses (1)
and (2) above), the Note Interest Distributable Amount to be distributed to
the holders of the Notes at their respective Interest Rates;
(4) to the Note Distribution Account, from any remaining Net
Collections, the Note Principal Distributable Amount (which amount
includes, if such Distribution Date is a Note Final Distribution Date, the
remaining principal amount of the related Class of Notes to be distributed
to the holders of such Class of Notes), to the holders of the Class A-1
Notes until the principal amount of the Class A-1 Notes has been reduced to
zero, second to the holders of the Class A-2 Notes until the principal
amount of the Class A-2 Notes has been reduced to zero
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and third to the holders of the Class A-3 Notes until the principal amount
of the Class A-3 Notes has been reduced to zero;
(5) to the Certificate Distribution Account, from any remaining Net
Collections, the Certificate Interest Distributable Amount to be
distributed to the holders of the Certificates;
(6) to the Certificate Distribution Account, from any remaining Net
Collections, the Certificate Principal Distributable Amount to be
distributed to the holders of the Certificates (which amount includes, if
such Distribution Date is the Certificate Final Distribution Date, the
Certificate Balance, as such balance has been reduced by payments thereon
in respect of such Distribution Date to be distributed to the holders of
the Certificates);
(7) to Financial Security, from any remaining Net Collections, any
amounts owing to Financial Security in respect of all payments, if any,
made under the Policies for which reimbursement has not yet been made to
Financial Security and any unreimbursed fees, expenses or other amounts
owing to Financial Security under the Insurance Agreement (collectively,
"Unreimbursed Insurer Amounts"); and
(8) in the event that the distributions described in clauses (1)
through (7) above have been funded exclusively from Net Collections, any
remaining Net Collections ("Excess Amounts") will be deposited into the
Spread Account, until the amount on deposit therein equals the Specified
Spread Account Balance, with any remaining Excess Amounts being distributed
as described under "-- Withdrawals from the Spread Account."
If the Notes are accelerated following an Event of Default, amounts
collected following the sale or liquidation of the property of the Trust will be
distributed in the priority described above. See "The Notes -- Events of
Default."
For the purposes hereof, the following terms will have the following
meanings:
The "Aggregate Scheduled Balance" will equal the sum of the Scheduled
Balances of each outstanding Contract. At the time of initial issuance of the
Securities, the initial aggregate principal amount of the Securities will equal
the Aggregate Scheduled Balance.
The "Aggregate Scheduled Balance Decline" will mean, with respect to any
Distribution Date, the amount by which the Aggregate Scheduled Balance as of the
beginning of the related Due Period (or as of the Cut-Off Date in the case of
the first Distribution Date) exceeds the Aggregate Scheduled Balance as of the
end of such Due Period.
The "Certificate Distributable Amount" will mean, with respect to any
Distribution Date, the sum of the Certificate Principal Distributable Amount and
the Certificate Interest Distributable Amount for that Distribution Date.
The "Certificate Interest Carryover Shortfall" will mean, with respect to
any Distribution Date, the excess of the sum of the Certificate Quarterly
Interest Distributable Amount for the immediately preceding Distribution Date
and any outstanding Certificate Interest Carryover Shortfall on that preceding
Distribution Date, over the amount in respect of interest on the Certificates
that is actually deposited in the Certificate Distribution Account on that
preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Pass-Through Rate for the related Interest Period.
The "Certificate Interest Distributable Amount" will mean, with respect to
any Distribution Date, the sum of the Certificate Quarterly Interest
Distributable Amount for that Distribution Date and the Certificate Interest
Carryover Shortfall for that Distribution Date.
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The "Certificate Percentage" will mean (i) for each Distribution Date prior
to the Distribution Date on which the principal amount of the Class A-3 Notes is
reduced to zero, 0% and (ii) for each Distribution Date on and after the
Distribution Date on which the principal amount of the Class A-3 Notes is
reduced to zero, a percentage equal to 100% minus the Note Percentage for that
Distribution Date.
The "Certificate Principal Carryover Shortfall" will mean, as of the close
of any Distribution Date, the excess of the sum of the Certificate Quarterly
Principal Distributable Amount and any outstanding Certificate Principal
Carryover Shortfall for the immediately preceding Distribution Date, over the
amount in respect of principal that is actually deposited in the Certificate
Distribution Account on that Distribution Date.
The "Certificate Principal Distributable Amount" will mean, with respect to
any Distribution Date, the sum of the Certificate Quarterly Principal
Distributable Amount for that Distribution Date and any outstanding Certificate
Principal Carryover Shortfall for the immediately preceding Distribution Date;
provided, however, that the Certificate Principal Distributable Amount shall not
exceed the Certificate Balance. Notwithstanding the foregoing, the Certificate
Principal Distributable Amount on the Certificate Final Distribution Date shall
not be less than the amount that is necessary (after giving effect to other
amounts to be deposited in the Certificate Distribution Account on such
Distribution Date and allocable to principal) to reduce the Certificate Balance
to zero.
The "Certificate Quarterly Interest Distributable Amount" will mean, with
respect to any Distribution Date, 90 days of interest (or, in the case of the
first Distribution Date, interest accrued from and including the Cut-Off Date to
but excluding that Distribution Date) at the Pass-Through Rate on the
Certificate Balance on the immediately preceding Distribution Date, after giving
effect to all payments of principal on such preceding Distribution Date (or, in
the case of the first Distribution Date, the Original Certificate Balance).
The "Certificate Quarterly Principal Distributable Amount" will mean, with
respect to any Distribution Date, the Certificate Percentage of the Principal
Distributable Amount for that Distribution Date.
A "Defaulted Contract" will mean, with respect to any Due Period, a
Contract (i) which is, at the end of such Due Period, delinquent in the amount
of at least two monthly payments or (ii) with respect to which the related
Financed Vehicle has been repossessed or repossession efforts have been
commenced.
A "Due Period" will mean, with respect to any Distribution Date, the
three-month period commencing on the first day of the third month preceding the
month in which that Distribution Date occurs (or commencing on the Cut-Off Date
in the case of the first Distribution Date) to the last day of the month
immediately preceding the month in which that Distribution Date occurs.
A "Liquidated Contract" will be a Contract that (i) has been repurchased by
the Seller or Master Servicer or as to which all of the principal has been paid
prior to its scheduled maturity; (ii) is a Defaulted Contract with respect to
which the related Financed Vehicle was repossessed and, after any cure period
required by law has expired, the Master Servicer has charged-off any losses
prior to the four-month period referenced in clause (iv) below; (iii) has been
paid in full on or after its scheduled maturity; or (iv) is delinquent as to all
or part of four or more payments of Monthly P&I. Contracts that become
Liquidated Contracts pursuant to clause (ii) or (iv) above and any collections
thereon will thereupon no longer be part of the Trust, although collections
thereon will be deposited in the Collection Account.
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The "Note Distributable Amount" will mean, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for that Distribution Date.
The "Note Interest Carryover Shortfall" will mean, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Note Interest Distributable Amount for that Class for the immediately preceding
Distribution Date plus any outstanding Note Interest Carryover Shortfall for
that Class on such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account with
respect to that Class on that preceding Distribution Date, plus, to the extent
permitted by applicable law, interest on the amount of interest due but not paid
to Noteholders of such Class on that preceding Distribution Date at the related
Interest Rate for the related Interest Period.
The "Note Interest Distributable Amount" will mean, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Quarterly Interest
Distributable Amount and the Note Interest Carryover Shortfall for such Class of
Notes for that Distribution Date.
The "Note Percentage" will mean (i) for each Distribution Date prior to the
Distribution Date on which the principal amount of the Class A-3 Notes is
reduced to zero, 100%; (ii) on the Distribution Date on which the principal
amount of the Class A-3 Notes is reduced to zero, (a) 100% until the principal
amount of the Class A-3 Notes has been reduced to zero and (b) with respect to
any remaining portion of the Principal Distributable Amount, 0%; and (iii) for
each Distribution Date after the principal amount of the Class A-3 Notes is
reduced to zero, 0%.
The "Note Principal Carryover Shortfall" will mean, as of the close of any
Distribution Date, the excess of the sum of the Note Quarterly Principal
Distributable Amount and any outstanding Note Principal Carryover Shortfall for
the immediately preceding Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account on that
Distribution Date.
The "Note Principal Distributable Amount" will mean, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount
for that Distribution Date and any outstanding Note Principal Carryover
Shortfall for the immediately preceding Distribution Date; provided, however,
that the Note Principal Distributable Amount with respect to a Class of Notes
shall not exceed the outstanding principal amount of such Class of Notes.
Notwithstanding the foregoing, the Note Principal Distributable Amount on each
Note Final Distribution Date shall not be less than the amount that is necessary
(after giving effect to other amounts to be deposited in the Note Distribution
Account on such Distribution Date and allocable to principal) to reduce the
outstanding principal amount of the related Class of Notes to zero.
The "Note Quarterly Interest Distributable Amount" will mean, with respect
to any Distribution Date, 90 days of interest (or in the case of the first
Distribution Date, interest accrued from and including the Cut-Off Date to but
excluding such Distribution Date, or in the case of the Class A-1 Notes,
interest for the actual number of days in the applicable Interest Period, based
on a 360-day year) at the related Interest Rate for each Class of Notes on the
outstanding principal amount of the Notes of that Class on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
Noteholders of that Class on or prior to that Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of that Class
of Notes).
The "Note Quarterly Principal Distributable Amount" will mean, with respect
to any Distribution Date, the Note Percentage of the Principal Distributable
Amount for that Distribution Date.
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The "Principal Distributable Amount" will mean, with respect to any
Distribution Date, the sum of (i) the Aggregate Scheduled Balance Decline for
such Distribution Date, plus (ii) the aggregate Scheduled Balances as of such
Distribution Date of all Contracts that became Liquidated Contracts pursuant to
clause (i), (ii) or (iv) of the definition of the term "Liquidated Contract"
during the related Due Period.
The "Scheduled Balance" of a Rule of 78's Contract will represent the
present value of the remaining scheduled payments of Monthly P&I due on that
Contract discounted on a monthly basis as described below, while the Scheduled
Balance of a Simple Interest Contract will be its actual principal balance. The
"Monthly P&I" for a Contract will be the installment of principal and interest
due thereunder each month (each such date, a "Due Date") and will be
substantially equal for the term of the Contract. The Scheduled Balance of a
Rule of 78's Contract for the Cut-Off Date and each Due Date will be set forth
in a schedule to the Sale and Servicing Agreement and will be equal to the
present value (determined as discussed below) at each of those dates of all
payments of Monthly P&I on the Contract that are due after such Due Date. That
present value will be determined by discounting (on a monthly basis) each
payment of Monthly P&I from the last day of the month in which that payment of
Monthly P&I is due to the first day of the month in which that Due Date occurs
using a discount rate that will produce a present value at the Cut-Off Date
equal to the outstanding principal balance of the Contract as of the Cut-Off
Date. The interest rate borne by substantially all of the Contracts will not be
less than the sum of the weighted average of the Interest Rates and the
Pass-Through Rate on the Closing Date plus the Servicing Fee Percent.
PAYMENT PRIORITIES OF THE NOTES AND THE CERTIFICATES; THE SPREAD ACCOUNT
General. The rights of the Securityholders to receive distributions with
respect to the Contracts will be subordinated to the rights of the Master
Servicer (to the extent that the Master Servicer has not been reimbursed for any
outstanding Advances and has not been paid all Servicing Fees), the Trustees (to
the extent the Trustees and such other entities have not received all Trust Fees
and Expenses payable to them) and Financial Security (to the extent of any
Unreimbursed Insurer Amounts). In addition, the rights of the Noteholders to
receive distributions with respect to the Contracts will be subject to the
priorities set forth under "-- Distributions on the Securities -- Deposits to
the Distribution Accounts; Priority of Payments," and the rights of the
Certificateholders to receive distributions with respect to the Contracts will
be subordinated to the rights of the Noteholders, in each case to the extent
described above. Such priorities and subordination are intended to enhance the
likelihood of timely receipt by senior Securityholders of the full amount of
interest and principal required to be paid to them, and to afford such senior
Securityholders limited protection against losses in respect of the Contracts.
The Spread Account. In the event of delinquencies or losses on the
Contracts, the foregoing protection will be affected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Contracts and by the establishment of a segregated trust account in the name of
the Indenture Trustee (the "Spread Account"). The Spread Account will be part of
the Trust. The Indenture Trustee will have a perfected security interest in the
Spread Account and in all amounts deposited in or credited to the Spread Account
as well as all Eligible Investments made with such deposits and earnings. The
Spread Account will be created with an initial deposit by the Seller on the
Closing Date of an amount equal to $20,000,000 ("the Spread Account Initial
Deposit"). The Spread Account will thereafter be funded by the deposit therein
of any Excess Amounts in respect of each Distribution Date, until the amount on
deposit in the Spread Account is at least equal to the Specified Spread Account
Balance.
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Amounts held from time to time in the Spread Account will continue to be
held for the benefit of holders of the Securities and Financial Security and
those amounts will be invested in Eligible Investments. Investment income on
monies on deposit in the Spread Account will be credited to the Spread Account.
Any loss on that investment will be charged to the Spread Account.
Calculation of Specified Spread Account Balance. The "Specified Spread
Account Balance" will be calculated as of the last day of each month (each, a
"Calculation Date") and will equal 7% of the Aggregate Scheduled Balance on such
Calculation Day, except that if on any Calculation Day (i) the Charge-Off
Percentage for the three calendar month period ending on that Calculation Day
exceeds 4% or (ii) the Delinquency Percentage for the three calendar month
period ending on that Calculation Day exceeds 2%, then the Specified Spread
Account Balance shall equal 10% of the Aggregate Scheduled Balance on that
Calculation Day (but only for so long as such Charge-Off Percentage or
Delinquency Percentage thresholds continue to be exceeded on any subsequent
Calculation Day). Notwithstanding the foregoing, in no event can the Specified
Spread Account Balance be greater than $50,000,000 (10% of the Cut-off Date
Aggregate Scheduled Balance) or less than $9,000,000 (the amount required by the
Rating Agencies and Financial Security); provided, however, it shall not be
greater than the outstanding aggregate principal amount of the Securities if
such amount is less than $9,000,000. At no time after the Closing Date will the
Seller, WII, the Master Servicer, Financial Security or any other entity be
required to deposit their own funds into the Spread Account.
The "Charge-Off Percentage" will mean, with respect to any three calendar
month period, the annualized percentage equivalent of the average of the
percentages of charged-off Contracts for each month in such period. For each
month, the percentage of charged-off Contracts shall be the percentage
equivalent of a fraction, the numerator of which is the aggregate Scheduled
Balance for that month of all Contracts that have become Liquidated Contracts
(as specified in clause (ii) or (iv) of the definition of Liquidated Contracts)
during that month, less any Net Liquidation Proceeds received during that month
(and not reflected in prior periods) with respect to those Contracts or from any
Contracts charged-off in prior periods, and the denominator of which is the
aggregate Scheduled Balance of all outstanding Contracts as of the end of the
immediately preceding month. The "Delinquency Percentage" will mean, with
respect to any three calendar month period, the average of the percentages of
delinquent Contracts for each month in that period. For each month the
percentage of delinquent Contracts shall be the percentage equivalent of a
fraction, the numerator of which is the sum of (i) the aggregate Scheduled
Balance of all outstanding Contracts 61 days or more delinquent (after taking
into account permitted extensions), plus (ii) the aggregate Scheduled Balance of
all Contracts in respect of which the related Financed Vehicles have been
repossessed but have not been liquidated (to the extent the related Contract is
not otherwise reflected in clause (i) above), and the denominator of which is
the aggregate Scheduled Balance of all outstanding Contracts, in each case on
the last day of that calendar month.
The Master Servicer may, from time to time after the date of this
Prospectus, and with the approval of Financial Security, request the Rating
Agencies to approve a formula for determining the Specified Spread Account
Balance that is different from that described above and would result in a
decrease in the amount of the Specified Spread Account Balance or the manner by
which the Spread Account is funded. If the Rating Agencies deliver a letter to
the Indenture Trustee, the Owner Trustee and Financial Security to the effect
that the use of any new formulation will not in and of itself result in a
qualification, reduction or withdrawal of its then-current rating of any Class
of Securities (without giving effect to the guaranty under either Policy of
payments owing to the Securityholders), then the Specified Spread Account
Balance will be determined in accordance with such new formula. The Sale and
Servicing Agreement will accordingly be amended to reflect that new calculation
without the consent of any Securityholder.
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WITHDRAWALS FROM THE SPREAD ACCOUNT
Amounts held from time to time in the Spread Account will continue to be
held for the benefit of the Noteholders, the Certificateholders and Financial
Security. On each Distribution Date funds will be withdrawn from the Spread
Account to the extent that the amount on deposit in the Note Distribution
Account with respect to any Distribution Date is less than the Note
Distributable Amount and will be deposited in the Note Distribution Account. In
addition, after giving effect to that withdrawal, funds will be withdrawn from
the Spread Account to the extent that the amount on deposit in the Certificate
Distribution Account is less than the Certificate Distributable Amount and will
be deposited in the Certificate Distribution Account. See "Certain Information
Regarding the Securities -- Payments from the Spread Account and Under the
Policies."
If the amount on deposit in the Spread Account on any Calculation Day or
any Distribution Date (after giving effect to all deposits thereto or
withdrawals therefrom on that Distribution Date) is greater than the Specified
Spread Account Balance, the Indenture Trustee will distribute any excess first,
to Financial Security, to the extent of any Unreimbursed Insurer Amounts, then
to the Seller until the Seller has received from the Spread Account an aggregate
amount equal to the Spread Account Initial Deposit and finally to the Seller and
WII in the proportions of 99% and 1%, respectively.
Upon any distributions to Financial Security, the Seller or WII, the
Securityholders will have no further rights in, or claims to, such amounts. None
of the Securityholders, the Indenture Trustee, the Owner Trustee, the Seller,
WII or Financial Security will be required to refund any amounts properly
distributed or paid to them, whether or not there are sufficient funds on any
subsequent Distribution Date to make full distributions to the Securityholders.
The obligations of Financial Security under the Policies will not be diminished
or otherwise affected by any amounts distributed to Financial Security.
PAYMENTS FROM THE SPREAD ACCOUNT AND UNDER THE POLICIES
On each Distribution Date on which the Note Distributable Amount exceeds
the amount then on deposit in the Note Distribution Account, the Noteholders
will be entitled to receive that deficiency (including amounts necessary to
reduce the outstanding principal balance of a given Class of Notes to zero on
the related Note Final Distribution Date), first, from amounts on deposit in the
Spread Account, second, if those amounts are insufficient, from amounts
otherwise payable to Certificateholders in respect of the Certificate
Distributable Amount and third, if those amounts are still insufficient, then
from the payment of a claim under the Note Policy.
On each Distribution Date on which the Certificate Distributable Amount
exceeds the amount then on deposit in the Certificate Distribution Account, the
Certificateholders will be entitled to receive that deficiency (including
amounts necessary to reduce the Certificate Balance to zero on the Certificate
Final Distribution Date), first, from amounts on deposit in the Spread Account,
and second, if those amounts are insufficient, from the payment of a claim under
the Certificate Policy.
STATEMENTS TO SECURITYHOLDERS
On or prior to each Distribution Date, you will be provided with a
statement prepared by the Master Servicer (the "Statement to Securityholders")
setting forth with respect to the Distribution Date or related Due Period, as
applicable, among other things, the following information:
(i) the amount of the Noteholder's or Certificateholder's distribution
allocable to principal (stated separately for each Class of Notes and the
Certificates);
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(ii) the amount of the Noteholder's or Certificateholder's
distribution allocable to interest (stated separately for each Class of
Notes and the Certificates);
(iii) the Aggregate Scheduled Balance as of the close of business on
the last day of the related Due Period;
(iv) the amount of the Servicing Fee paid to the Master Servicer with
respect to the related Due Period;
(v) the amount of any Note Interest Carryover Shortfall, Note
Principal Carryover Shortfall, Certificate Interest Carryover Shortfall and
Certificate Principal Carryover Shortfall on that Distribution Date and the
change in such amounts from those with respect to the immediately preceding
Distribution Date;
(vi) the Note Pool Factor for each Class of Notes and the Certificate
Pool Factor, in each case as of that Distribution Date; and
(vii) the balance on deposit in the Spread Account on that
Distribution Date, after giving effect to distributions made on that
Distribution Date, and the change in that balance from the immediately
preceding Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) and (v) above
will be expressed in the aggregate and as a dollar amount per $1,000 of original
principal amount of a Note or the Original Certificate Balance, as the case may
be. Copies of the statements may be obtained by Owners of Securities by a
request in writing addressed to the related Trustee at its Corporate Trust
Office. In addition, within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of the Sale and
Servicing Agreement, the Indenture Trustee and the Owner Trustee will mail to
each person who at any time during such calendar year shall have been a
Noteholder or a Certificateholder, as the case may be, a statement containing
the sum of the amounts described in clauses (i), (ii), (iv) and (v) above for
the purposes of such holder's preparation of federal income tax returns. See
"Certain Federal Income Tax Consequences."
EVIDENCE AS TO COMPLIANCE
The Sale and Servicing Agreement. The Sale and Servicing Agreement will
provide that a firm of independent public accountants will furnish to the
Indenture Trustee and the Owner Trustee and Financial Security, on or before 90
days after the end of each fiscal year of the Master Servicer, beginning with
the fiscal year ended December 31, 1999, a statement as to compliance by the
Master Servicer during the preceding fiscal year (or since the Closing Date in
the case of the first such statement) with certain standards relating to the
servicing of the Contracts.
The Sale and Servicing Agreement will also provide for delivery to the
Indenture Trustee and the Owner Trustee and Financial Security, on or before 90
days after the end of each fiscal year of the Master Servicer, commencing with
the fiscal year ended December 31, 1999, of a certificate signed by two officers
of the Master Servicer stating that the Master Servicer has fulfilled its
obligations under the Sale and Servicing Agreement throughout the preceding
fiscal year (or since the Closing Date in the case of the first such
certificate) or, if there has been a default in the fulfillment of any such
obligation, describing each such default.
Copies of those statements and certificates may be obtained by
Securityholders by a request in writing addressed to the related Trustee at its
Corporate Trust Office.
The Indenture. The Trust will be required to file annually with the
Indenture Trustee and Financial Security a written statement as to the
fulfillment of its obligations under the Indenture.
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The Indenture Trustee will be required to mail each year to all related
Noteholders a brief report relating to, among other things:
- its eligibility and qualification to continue as Indenture Trustee under
the Indenture;
- any amounts advanced by it under the Indenture;
- the amount, interest rate and maturity date of certain indebtedness owing
by the Trust to the Indenture Trustee in its individual capacity;
- the property and funds physically held by the Indenture Trustee as
Indenture Trustee; and
- any action taken by it that materially affects the Notes and that has not
been previously reported.
CERTAIN MATTERS REGARDING THE MASTER SERVICER
The Sale and Servicing Agreement will provide that the Master Servicer may
not resign from its obligations and duties as Master Servicer except upon
determination that the Master Servicer's performance of such duties is no longer
permissible under applicable law. No resignation will become effective until (i)
the Indenture Trustee or a successor servicer has assumed the Master Servicer's
servicing obligations and duties under the Sale and Servicing Agreement and (ii)
the Rating Agencies confirm that the selection of such successor master servicer
will not result in the qualification, reduction or withdrawal of its
then-current rating of any Class of Securities.
The Sale and Servicing Agreement will further provide that neither the
Master Servicer nor any of its directors, officers, employees and agents shall
be under any liability to the Trust or the Securityholders for taking any action
or for refraining from taking any action pursuant to the Sale and Servicing
Agreement, or for errors in judgment; provided, however, that neither the Master
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties thereunder. In addition, the Sale and Servicing Agreement will
provide that the Master Servicer will be under no obligation to appear in,
prosecute or defend any legal action that is not incidental to its servicing
responsibilities under the Sale and Servicing Agreement and that, in its
opinion, may cause it to incur any expense or liability. The Master Servicer
may, however, undertake any reasonable action that it may deem necessary or
desirable in respect of the Sale and Servicing Agreement and the rights and
duties of the parties thereto and the interests of the Securityholders
thereunder. In any event, the legal expenses and costs of that action and any
liability resulting therefrom will be expenses, costs and liabilities of the
Trust, and the Master Servicer will be entitled to be reimbursed therefor out of
funds on deposit in the Collection Account. Any indemnification or reimbursement
could reduce the amount otherwise available for distribution to Securityholders.
Any corporation into which the Master Servicer may be merged or
consolidated, any corporation resulting from any merger, conversion or
consolidation to which the Master Servicer is a party or any corporation
succeeding to the business of the Master Servicer or the Master Servicer's
obligations as the Master Servicer, will be the successor of the Master Servicer
under the Sale and Servicing Agreement.
SERVICER DEFAULT
"Servicer Defaults" under the Sale and Servicing Agreement will consist of:
(a) a claim being made under either the Note Policy or the Certificate
Policy;
(b) any failure by the Master Servicer to deposit in, credit to, or make
the required distribution from the following, and such failure is not
remedied within three Business Days after the
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Master Servicer receives written notice from the Indenture Trustee, the
Owner Trustee, or Financial Security or after the Master Servicer
discovers such failure:
- the Collection Account,
- either Distribution Account,
- the Spread Account, or
- the Holding Account
(c) any failure by the Master Servicer to deliver to the Indenture Trustee,
the Owner Trustee or Financial Security certain reports required by the
Sale and Servicing Agreement by the fourth Business Day prior to the
related Distribution Date or to perform certain other covenants under
the Sale and Servicing Agreement;
(d) any failure by the Master Servicer or the Seller to observe or perform
in any material respect any other covenant or agreement in the Sale and
Servicing Agreement, which failure materially and adversely affects the
rights of Securityholders, Financial Security, the Indenture Trustee or
the Owner Trustee and which continues unremedied for 30 days after the
giving of written notice of such failure to:
- the Master Servicer or the Seller, as the case may be, by the Owner
Trustee, the Indenture Trustee or Financial Security or
- to the Master Servicer or the Seller, as the case may be, and to the
Indenture Trustee or the Owner Trustee by:
- holders of Notes evidencing at least 25% of the voting interests of
all Notes, or if the Notes have been paid in full, by the holders of
the Certificates evidencing at least 25% of the voting interests
thereof or;
- so long as a default under either Policy has not occurred or is not
continuing and no insolvency of Financial Security has occurred, by
Financial Security;
(e) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings and certain action by the
Seller or Master Servicer indicating its insolvency, reorganization
pursuant to bankruptcy or similar proceedings or inability to pay its
obligations (each, an "Insolvency Event"); and
(f) any material breach of any of the representations and warranties of the
Master Servicer or the Seller (except for any breaches relating to
Contracts repurchased by the Seller or the Master Servicer) that has a
material adverse effect on the Noteholders or the Certificateholders
and, within 30 days after written notice thereof shall have been given
to the Master Servicer or the Seller by:
- the Indenture Trustee or the Owner Trustee;
- by holders of Notes (voting together as a single class) or
Certificates evidencing at least 25% of the respective voting
interests thereof, or
- so long as no default under either Policy has occurred and is
continuing and no insolvency of Financial Security has occurred, by
Financial Security. (Sale and Servicing Agreement, Section 8.01)
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RIGHTS UPON SERVICER DEFAULT
As long as a Servicer Default remains unremedied, the Indenture Trustee,
Financial Security or holders of Notes representing not less than 25% of the
voting interests thereof (or, if the Notes have been paid in full and the
Indenture has been discharged in accordance with its terms, by holders of
Certificates evidencing not less than 25% of the voting interests thereof),
voting together as a single class, may terminate all the rights and obligations
of the Master Servicer under the Sale and Servicing Agreement. After such
termination, the Indenture Trustee will automatically succeed to all the
responsibilities, duties and liabilities of the Master Servicer in its capacity
as such under such agreement and will be entitled to similar compensation
arrangements. If, however, a bankruptcy trustee or similar official has been
appointed for the Master Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to prevent
the Indenture Trustee, Financial Security or the Noteholders (or
Certificateholders) from effecting a transfer of servicing. In the event that
the Indenture Trustee is unwilling or unable so to act, it may appoint or
petition a court of competent jurisdiction to appoint a successor with a net
worth of at least $50,000,000 and whose regular business includes the servicing
of motor vehicle receivables. The Indenture Trustee may make such arrangements
for compensation to be paid, which in no event may be greater than the servicing
compensation paid to the Master Servicer under the Sale and Servicing Agreement.
Notwithstanding such termination, the Master Servicer shall be entitled to
payment of certain amounts payable to it prior to such termination, for services
rendered prior to such termination. (Sale and Servicing Agreement, Sections 8.01
and 8.02)
So long as Financial Security is not in default under either Policy it may
direct the actions of the Indenture Trustee upon an Event of Default.
WAIVER OF PAST DEFAULTS
The holders of Notes evidencing at least 51% of the voting interests
thereof, voting together as a single class (or, if all of the Notes have been
paid in full and the Indenture has been discharged in accordance with its terms,
the holders of Certificates evidencing at least 51% of the voting interests
thereof), may, on behalf of all Securityholders, with the consent of Financial
Security, waive any default by the Master Servicer in the performance of its
obligations under the Sale and Servicing Agreement and its consequences. A
default, however, in making any required deposits to or payments from the
Collection Account, the Holding Account, the Spread Account, the Certificate
Distribution Account or the Note Distribution Account in accordance with that
agreement or in respect of a covenant or provision of that agreement that cannot
be modified or amended without the consent of each Securityholder, may only be
waived by the approval of holders of all of the Securities. No such waiver will
impair the Securityholders' rights with respect to subsequent Servicer Defaults.
VOTING INTERESTS
The "voting interests" of the (i) Notes of a Class or Classes will be
allocated among the Noteholders or related Note Owners, as the case may be, in
accordance with the unpaid principal amount of the Notes of each Class or
Classes represented thereby and (ii) Certificates will be allocated among the
Certificateholders or related Certificate Owners, as the case may be, in
accordance with the Certificate Balance represented thereby; except that in
certain circumstances Securities held by the Seller, WFS or any of their
respective affiliates will be excluded from such determination.
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AMENDMENT
Amendment of the Sale and Servicing Agreement. The Sale and Servicing
Agreement may be amended, with the consent of Financial Security but without the
consent of the Noteholders or the Certificateholders, to:
- cure any ambiguity,
- correct or supplement any provision therein which may be inconsistent
with any other provision therein,
- add any other provisions with respect to matters or questions arising
under the agreement which are not inconsistent with the provisions
thereof,
- add or provide for any credit enhancement for any Class of Securities or
- permit certain changes with respect to the Specified Spread Account
Balance.
The requirements that must be met to make the above listed amendments are:
(a) that any amendment will not, in the opinion of counsel satisfactory to
the related Trustee, materially and adversely affect the interests of any
Securityholder, and
(b) that in the case of a change with respect to the Specified Spread
Account Balance:
- the Trustee receives a letter from Standard & Poor's which basically
states that its then-current rating on each Class of Securities will
not be qualified, reduced or withdrawn due to that amendment and
- the Master Servicer provides Moody's notice of such amendment.
The Sale and Servicing Agreement may also be amended with the consent of
the holders of Notes and Certificates evidencing at least 51% of the respective
voting interests thereof, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such agreement or
of modifying in any manner the rights of the related Securityholders of each
Class; provided, that no such amendment may (i) except as described above,
increase or reduce in any manner the amount of or accelerate or delay the timing
of collections of payments on or in respect of the Contracts, required
distributions on the Notes or the Certificates, or the Specified Spread Account
Balance or the manner in which the Spread Account is funded, or (ii) reduce the
percentage of the voting interests of which the holders of any Class of
Securities are required to consent to any such amendment, without the consent of
Financial Security and the holders of all of the relevant Class of Securities.
Amendment of the Trust Agreement. The Trust Agreement may be amended, with
the consent of Financial Security but without the consent of the
Securityholders, to:
- cure any ambiguity,
- correct or supplement any provision which may be inconsistent with any
other provision or
- add any other provisions with respect to matters or questions arising
thereunder which are not inconsistent with the provisions thereof.
The Trust Agreement may also be amended with the consent of Securityholders
evidencing at least 51% of the respective voting interests thereof, for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of such agreement or of modifying in
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any manner the rights of the Noteholders or the Certificateholders; provided,
that no such amendment may increase or reduce in any manner the amount of or
accelerate or delay the timing of (i) collections of payments on or in respect
of the Contracts or required distributions on the Notes or the Certificates or
any Interest Rate or the Pass-Through Rate or (ii) reduce the aforesaid
percentage of the voting interests of which the holders of any Class of
Securities are required to consent to any such amendment, without the consent of
Financial Security and the holders of all of the relevant Class of Securities.
Amendment of the Indenture. The Trust and the Indenture Trustee (on behalf
of the Trust) may, without the consent of the Noteholders but with the consent
of Financial Security, enter into one or more supplemental indentures for any of
the following purposes:
(i) to correct or amplify the description of the property subject to the
lien of the Indenture or to subject additional property to the lien of the
Indenture;
(ii) to provide for the assumption of the Notes and the Indenture
obligations by a permitted successor to the Trust;
(iii) to add additional covenants for the benefit of the related
Noteholders or to surrender any rights or powers conferred upon the Trust;
(iv) to convey, transfer, assign, mortgage or pledge any property to the
Indenture Trustee;
(v) to cure any ambiguity or correct or supplement any provision in the
Indenture or in any supplemental indenture which may be inconsistent with any
other provision in the Indenture, any supplemental indenture, the Sale and
Servicing Agreement or certain other agreements; provided, that any such action
shall not adversely affect the interests of any Noteholder;
(vi) to provide for the acceptance of the appointment of a successor
Indenture Trustee or to add to or change any of the provisions of the Indenture
as shall be necessary and permitted to facilitate the administration by more
than one trustee;
(vii) to modify, eliminate or add to the provisions of the Indenture in
order to comply with the Trust Indenture Act of 1939, as amended; and
(viii) to add any provisions to, change in any manner, or eliminate any of
the provisions of, the Indenture or modify in any manner the rights of
Noteholders under the Indenture; provided, that any of those actions will not,
in the opinion of counsel satisfactory to the related Trustee, materially and
adversely affect the interests of any Noteholder or result in the creation of a
new security; and further provided that any of those actions shall not, as
evidenced by an opinion of counsel, adversely affect in any material respect the
interests of any Noteholder unless such Noteholder's consent is otherwise
obtained as described below.
Without the consent of the holder of each outstanding Note affected
thereby, no supplemental indenture may:
- change the due date of any installment of principal of or interest on any
Note or reduce the principal amount thereof, the interest rate thereon
(or the method by which such interest or principal is calculated) or the
redemption price with respect thereto or change any place of payment
where or the coin or currency in which any Note or any interest thereon
is payable;
- impair the right to institute suit for the enforcement of provisions of
the Indenture regarding payment;
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- reduce the percentage of the voting interests of the Notes, the consent
of the holders of which is required for any such supplemental indenture
or the consent of the holders of which is required for any waiver of
compliance with certain provisions of the Indenture or of certain
defaults thereunder and their consequences as provided for in the
Indenture;
- modify or alter the provisions of the Indenture regarding the voting of
Notes held by the Trust, any other obligor on the Notes, the Seller or
any of their respective affiliates;
- reduce the percentage of the voting interests of the Notes, the consent
of the holders of which is required to direct the Indenture Trustee to
sell or liquidate the property of the Trust if the proceeds of that sale
or liquidation would be insufficient to pay the principal amount of and
accrued but unpaid interest on the outstanding Notes;
- decrease the percentage of the voting interests of such Notes required to
amend the provisions of the Indenture which specify the applicable
percentage of voting interests of the Notes necessary to amend such
Indenture or certain other related agreements; or
- permit the creation of any lien ranking prior to or on a parity with the
lien of the Indenture with respect to any of the collateral for the Notes
or, except as otherwise permitted or contemplated in the Indenture,
terminate the lien of such Indenture on any of the collateral for the
Notes or deprive the holder of any Note of the security afforded by the
lien of the Indenture;
provided, that any of those actions will not, in the opinion of counsel
satisfactory to the related Trustee, result in the creation of a new security.
LIST OF SECURITYHOLDERS
Upon the written request of the Master Servicer, the Owner Trustee will
provide to the Master Servicer within 15 days after receipt of that request, a
list of the names and addresses of all Certificateholders. In addition, three or
more holders of Certificates or holders of Certificates evidencing not less than
25% of the voting interests of the Certificates, upon compliance by those
Certificateholders with certain provisions of the Trust Agreement, may request
that the Owner Trustee allow them access during business hours to the current
list of Certificateholders for purposes of communicating with other
Certificateholders with respect to their rights under the Trust Agreement.
Three or more holders of Notes may, by written request to the Indenture
Trustee, obtain access to the list of all Noteholders maintained by such
Indenture Trustee for the purpose of communicating with the other Noteholders
with respect to their rights under the Indenture or under the Notes. The
Indenture Trustee may elect not to afford the requesting Noteholders access to
the list of Noteholders if it agrees to mail the desired communication or proxy,
on behalf of and at the expense of the requesting Noteholders, to all
Noteholders.
Neither the Trust Agreement nor the Indenture will provide for the holding
of any annual or other meetings of Securityholders.
NO BANKRUPTCY PROCEEDINGS
The Trust Agreement will provide that the Owner Trustee, each
Certificateholder, the Indenture Trustee and each Noteholder agree that they
will not at any time institute, or join in any institution against, the Trust,
the Seller or WII, any bankruptcy proceedings relating to the Certificates, the
Notes, the Trust Agreement, the Indenture or certain other agreements.
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TERMINATION
The obligations of the Master Servicer, the Seller, the Owner Trustee and
Indenture Trustee pursuant to the Trust Agreement, Sale and Servicing Agreement
or Indenture will terminate upon the earliest to occur of (i) the maturity or
other liquidation of the last Contract and the disposition of any amounts
received upon liquidation of any property remaining in the Trust, (ii) the
payment to you of all amounts required to be paid to you pursuant to such
agreement and (iii) the occurrence of the event described below.
In order to avoid excessive administrative expenses, the Seller will be
permitted to purchase the remaining Contracts from the Trust on any Distribution
Date as of which the Aggregate Scheduled Balance is less than 10% of the Cut-Off
Date Aggregate Scheduled Balance at a price equal to the aggregate unpaid
principal balances of the related Contracts, together with accrued interest
thereon through the related Interest Period.
The Owner Trustee and Indenture Trustee will give you written notice of
termination at least 20 days prior to such termination. The final distribution
to you will be made only upon surrender and cancellation of your Securities at
the office or agency of the related Trustee specified in the notice of
termination. Any funds remaining in the Trust at least 18 months after the date
of termination and after such Trustee has attempted to locate a Securityholder
and such measures have failed, will be distributed to a charity designated by
the Master Servicer.
Any outstanding Notes will be redeemed concurrently with any Optional
Purchase, and the subsequent distribution to the related Certificateholders of
all amounts required to be distributed to them pursuant to the Trust Agreement
will effect early retirement of the Certificates.
PAYMENT IN FULL OF NOTES
Upon the payment in full of all outstanding Notes and the satisfaction and
discharge of the Indenture, the Owner Trustee will succeed to all the rights of
the Indenture Trustee, and the Certificateholders will succeed to all the rights
of the Noteholders, under the Sale and Servicing Agreement, except as otherwise
provided therein.
THE TRUSTEES
Each of the Owner Trustees and the Indenture Trustee (the "Trustees") may
resign at any time, in which event the Administrator, or its successor, will be
obligated to appoint a successor trustee. The Administrator may also remove the
Owner Trustee or the Indenture Trustee, in each case if such Trustee becomes
insolvent or ceases to be eligible to continue as a Trustee under the Trust
Agreement or Indenture, as the case may be. In such event, the Administrator
will be obligated to appoint a successor Trustee. Any resignation or removal of
a Trustee and appointment of a successor Trustee will not become effective until
acceptance of the appointment by the successor Trustee.
Each Trustee and any of its affiliates may hold Securities in their own
names or as pledgees. For the purpose of meeting the legal requirements of
certain jurisdictions, the Administrator and the Owner Trustee or Indenture
Trustee acting jointly (or in some instances, the Owner Trustee and Indenture
Trustee acting without the Administrator) will have the power to appoint
co-trustees or separate trustees of all or any part of the Trust. In the event
of such an appointment, all rights, powers, duties and obligations conferred or
imposed upon the affected Trustee by the Indenture, Sale and Servicing Agreement
or Trust Agreement will be conferred or imposed upon that Trustee and the
separate trustee or co-trustee jointly, or, in any jurisdiction in which that
Trustee will be incompetent
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or unqualified to perform certain acts, singly upon the separate trustee or
co-trustee who will exercise and perform such rights, powers, duties and
obligations solely at the direction of that Trustee.
The Trust Agreement will further provide that WII will pay the fees of the
Owner Trustee and the Trust will, or will cause the Administrator to, pay the
fees of the Indenture Trustee. The Trust Agreement will further provide that the
Owner Trustee will be entitled to indemnification by the Master Servicer for,
and will be held harmless against, any loss, liability or expense incurred by it
not resulting from its own willful misconduct, bad faith or negligence (other
than by reason of a breach of any of its representations or warranties set forth
in such agreement). The Indenture will further provide that the Indenture
Trustee will be entitled to indemnification by the Trust or the Administrator
for any loss, liability or expense incurred by it not resulting from its own
willful misconduct, negligence or bad faith.
DUTIES OF THE TRUSTEES
Neither Trustee will make any representations as to the validity or
sufficiency of the Trust Agreement or Indenture, the Securities issued pursuant
thereto (other than the execution and authentication thereof), or of any
Contracts or related documents. Neither Trustee will be accountable for the use
or application by the Seller, WII or the Master Servicer of any funds paid to
the Seller, WII or the Master Servicer in respect of the Securities or the
related Contracts, or the investment of any monies by the Master Servicer before
such monies are deposited into the Collection Account. The Trustees will not
independently verify the existence or characteristics of the Contracts. If an
Event of Default or Servicer Default has not occurred or is not continuing, each
Trustee will be required to perform only those duties specifically required of
it under the Indenture, Trust Agreement or Sale and Servicing Agreement, as the
case may be. Generally those duties will be limited to the receipt of the
various certificates and reports or other instruments required to be furnished
to such Trustee under such agreements, in which case it will only be required to
examine them to determine whether they conform to the requirements of such
agreements. No Trustee will be charged with knowledge of a failure by the Master
Servicer to perform its duties under the relevant agreements which failure
constitutes an Event of Default or a Servicer Default unless such Trustee
obtains actual knowledge of such failure as specified in such agreements.
No Trustee will be under any obligation to exercise any of the rights or
powers vested in it by the Indenture, Trust Agreement or Sale and Servicing
Agreement, as the case may be, or to make any investigation of matters arising
thereunder or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request order or direction of any of the
Securityholders, unless those Securityholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby. No Securityholder will have any right
to institute any proceeding with respect to the Indenture, Trust Agreement or
Sale and Servicing Agreement, unless that holder previously has given to the
appropriate Trustee written notice of default and (i) the default arises from
the Master Servicer's failure to remit payments when due or (ii) the holders of
Securities evidencing not less than 25% of the voting interests of all of the
related Securities, voting together as a single class, have made written request
upon the appropriate Trustee to institute that proceeding in its own name as
Trustee thereunder and have offered to that Trustee reasonable indemnity and
that Trustee for 60 days has neglected or refused to institute that proceeding.
ADMINISTRATION AGREEMENT
WFS, in its capacity as administrator (the "Administrator"), will enter
into an agreement (the "Administration Agreement") with the Trust, the Seller,
WII and the Indenture Trustee pursuant to
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which the Administrator will agree, to the extent provided in the Administration
Agreement, to provide the notices and to perform other administrative
obligations required to be provided or performed by the Trust or the Owner
Trustee under the Indenture. As compensation for the performance of the
Administrator's obligations under the Administration Agreement and as
reimbursement for its expenses related thereto, the Administrator will be
entitled to a monthly administration fee (the "Administration Fee"), which fee
will be paid by the Seller and not from the proceeds of the Contracts or other
assets of the Trust.
PREPAYMENT CONSIDERATIONS
Because the rate of distribution of principal on the Securities will depend
on the rate of payment on the Contracts (including prepayments, liquidations and
repurchases of Contracts by the Seller or the Master Servicer under certain
conditions and the sale or liquidation of the property of the Trust under
certain conditions following the occurrence of an Event of Default), the final
distribution on each Class of Notes or the Certificates is likely to occur
earlier than the related Final Distribution Date. The right of the Seller to
repurchase all of the Contracts upon certain events prior to the Certificate
Final Distribution Date is described under "-- Termination" and "The Master
Servicer."
The law of California and most other states generally requires that retail
installment sales contracts such as the Contracts permit full and partial
prepayment without penalty, although a minimum finance charge may be applicable
in some circumstances. Any prepayments (including certain partial prepayments
not designated as advance payments by the Obligor on the related Contract) can
reduce the average life of the Contracts. The Master Servicer will permit the
sale or other transfer of a Financed Vehicle without accelerating the maturity
of the related Contract if such Contract is assumed by a person satisfying WFS'
then-current underwriting standards. Partial prepayments not designated as
advance payments by the Obligor on a Contract and all partial prepayments as to
Simple Interest Contracts will affect the average life of the Contracts because
those partial prepayments will be passed through to Securityholders on the
Distribution Date following the Due Period in which they are received. Those
partial prepayments designated as advance payments for Rule of 78's Contracts
only will be held until passed through in accordance with the original schedule
of payments for the related Contract or until the amount of such partial
prepayment equals the remaining principal amount plus accrued interest due on
the related Contract. Any reinvestment risk resulting from the rate of
prepayments of the Contracts and the distribution of such prepayments to
Securityholders will be borne entirely by the Securityholders.
Purchases by the Seller of Contracts because of certain material defects in
Contract documentation or due to breaches of its respective representations and
warranties in respect thereof, in either case that materially and adversely
affect the interests of Securityholders, the Indenture Trustee, the Owner
Trustee or Financial Security, and purchases by the Master Servicer of Contracts
due to certain breaches in representations and warranties made by the Master
Servicer or due to certain breaches by the Master Servicer in servicing
procedures, in either case that materially and adversely affect such Contracts
can reduce the average life of the Contracts and the Securities. Any reduction
in the average life of the Securities will reduce the aggregate amount of
interest received by the Securityholders over the life of the Securities.
While WFS does not maintain specific records for this purpose, it estimates
that, based on its experience over the past five years, the monthly prepayment
rate on the outstanding principal amount of the retail installment sales
contracts and installment loans secured by automobiles and light duty trucks it
has originated and serviced, for itself or others, has been approximately 1.5%
of the outstanding principal balance. However, no assurance can be given that
the Contracts will experience this rate of prepayment or any greater or lesser
rate. WFS does not maintain specific records which
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would suggest any difference in prepayment rate for Rule of 78's Contracts as
compared with Simple Interest Contracts.
THE POLICIES
The following summary of the terms of the Policies does not purport to be
complete. You should review the summary along with the Note Policy and the
Certificate Policy, which are included as exhibits to the Registration Statement
of which this Prospectus is a part, for complete information. The following
summary does, however, describe the material terms of the Policies.
On the Closing Date, Financial Security will issue the Note Policy to the
Indenture Trustee and the Certificate Policy to the Owner Trustee pursuant to
the insurance, indemnity and pledge agreement to be dated as of November 1, 1999
(the "Insurance Agreement"), among Financial Security, the Trust, the Seller,
Bankers Trust Company as Collateral Agent for Financial Security, WFS and WII.
Pursuant to the Note Policy, Financial Security will fully, unconditionally and
irrevocably guarantee to the Noteholders payment of the Scheduled Payments for
each Distribution Date. Pursuant to the Certificate Policy, Financial Security
will unconditionally and irrevocably guarantee to the Certificateholders payment
of the Guaranteed Distributions for each Distribution Date.
THE NOTE POLICY
Simultaneously with the issuance of the Notes, Financial Security will
deliver the Note Policy to the Indenture Trustee for the benefit of each
Noteholder. Under the Note Policy, Financial Security will unconditionally and
irrevocably guarantee to the Indenture Trustee for the benefit of each
Noteholder the full and complete payment of (i) Scheduled Payments (as defined
below) on the Notes and (ii) the amount of any Scheduled Payment which
subsequently is avoided in whole or in part as a preference payment under
applicable law.
"Scheduled Payments" will mean, with respect to any Distribution Date,
payments which are scheduled to be made on the Notes during the term of the Note
Policy in accordance with the original terms of the Notes when issued and
without regard to any subsequent amendment or modification of the Notes or of
the Indenture except amendments or modifications to which Financial Security has
given its prior written consent in an amount equal to (i) the Note Interest
Distributable Amount and (ii) the Note Principal Distributable Amount. Scheduled
Payments will not include payments which become due on an accelerated basis as a
result of (a) a default by the Trust, (b) any election to pay principal on an
accelerated basis, (c) the occurrence of an Event of Default under the Indenture
or (d) any other cause, unless Financial Security elects, in its sole
discretion, to pay in whole or in part such principal due upon acceleration,
together with any accrued interest to the date of acceleration. If Financial
Security does not so elect, the Note Policy will continue to guarantee Scheduled
Payments on the Notes in accordance with their original terms. Scheduled
Payments shall not include any portion of a Note Interest Distributable Amount
due to Noteholders because a notice and certificate in proper form was not
timely Received (as defined below) by Financial Security unless, in each case,
Financial Security elects, in its sole discretion, to pay such amount in whole
or in part. Scheduled Payments shall not include any amounts due in respect of
the Notes attributable to any increase in interest rate, penalty or other sum
payable by the Trust by reason of any default or any event of default in respect
of the Notes, or by reason of any deterioration of the creditworthiness of the
Trust. Scheduled Payments shall also not include, nor shall coverage be provided
under the Note Policy in respect of, any taxes, withholding or other charge with
respect to
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any Noteholder imposed by any governmental authority due in connection with the
payment of any Scheduled Payment to a Noteholder.
Payment of claims on the Note Policy made in respect of Scheduled Payments
will be made by Financial Security following Receipt (as defined below) by
Financial Security of the appropriate notice for payment on the later to occur
of (a) 12:00 noon, New York City time, on the fourth Business Day following
Receipt of such notice for payment, and (b) 12:00 noon, New York City time, on
the date on which such payment was due on the Notes.
THE CERTIFICATE POLICY
Simultaneously with the issuance of the Certificates, Financial Security
will deliver the Certificate Policy to the Owner Trustee for the benefit of each
Certificateholder. Under the Certificate Policy, Financial Security will
unconditionally and irrevocably guarantee to the Owner Trustee for the benefit
of each Certificateholder the full and complete payment of (i) Guaranteed
Distributions (as defined below) with respect to the Certificates and (ii) the
amount of any Guaranteed Distribution which subsequently is avoided in whole or
in part as a preference payment under applicable law.
"Guaranteed Distributions" will mean, with respect to each Distribution
Date, the distributions to be made to Certificateholders (other than to WII) in
an aggregate amount equal to the Certificate Interest Distributable Amount and
the Certificate Principal Distributable Amount due and payable on such
Distribution Date in accordance with the original terms of the Certificates when
issued and without regard to any amendment or modification of the Certificates,
the Sale and Servicing Agreement or the Trust Agreement to which Financial
Security has not given its prior written consent. Guaranteed Distributions shall
not include, nor shall coverage be provided under the Certificate Policy in
respect of, any taxes, withholding or other charge imposed with respect to any
Certificateholder by any governmental authority.
Payment of claims on the Certificate Policy made in respect of Guaranteed
Distributions will be made by Financial Security following Receipt (as defined
below) by Financial Security of the appropriate notice for payment on the later
to occur of (a) 12:00 noon, New York City time, on the fourth Business Day
following Receipt of such notice for payment, and (b) 12:00 noon, New York City
time, on the date on which such payment was due on the Certificates.
OTHER TERMS OF THE POLICIES
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made under
either Policy, Financial Security shall cause such payment to be made on the
later of:
(a) the date when due to be paid pursuant to the Order referred to below or
(b) the first to occur of:
(i) the fourth Business Day following Receipt by Financial Security
from the Indenture Trustee or the Owner Trustee, as the case may
be, of:
(A) a certified copy of the order (the "Order") of the court or
other governmental body which exercised jurisdiction to the
effect that the Noteholder is required to return principal or
interest paid on the Notes during the term of the Note Policy
or the Certificateholder is required to return principal or
interest distributed with respect to the Certificates during
the term of the Certificate Policy, in either case
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because such distributions were avoidable as preference
payments under applicable bankruptcy law,
(B) a certificate of the Noteholder or Certificateholder, as the
case may be, that the Order has been entered and is not
subject to any stay and
(C) an assignment duly executed and delivered by such Noteholder
or Certificateholder, as the case may be, in such form as is
reasonably required by Financial Security and provided to such
Securityholder by Financial Security, irrevocably assigning to
Financial Security all rights and claims of such
Securityholder relating to or arising under the related Class
of Notes or the Certificates, as the case may be, against the
debtor which made such preference payments or otherwise with
respect to such preference payment, or
(ii) the date of Receipt by Financial Security from the Indenture
Trustee or the Owner Trustee, as the case may be, of the items
referred to in clauses (A), (B) and (C) above if, at least four
Business Days prior to such date of Receipt, Financial Security
shall have Received written notice from the related Trustee that
such items were to be delivered on such date and such date was
specified in such notice.
Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order and not to the
related Trustee or any Securityholder directly (unless a Securityholder has
previously paid such amount to the receiver, conservator, debtor-in-possession
or trustee in bankruptcy named in the Order in which case such payment shall be
disbursed to the related Trustee for distribution to such Securityholder upon
proof of such payment reasonably satisfactory to Financial Security). In
connection with the foregoing, and as will be provided in the Indenture and Sale
and Servicing Agreement, Financial Security will have certain rights to direct
proceedings regarding the seeking to avoid payments made on or in respect of the
Contracts, the Notes or the Certificates as preferential.
The terms "Receipt" and "Received," with respect to either Policy, shall
mean actual delivery to Financial Security and to its fiscal agent, if any,
prior to 12:00 noon, New York City time, on a Business Day and delivery either
on a day that is not a Business Day or after 12:00 noon, New York City time,
shall be deemed to be Receipt on the next succeeding Business Day. If any notice
or certificate given under a Policy by the Indenture Trustee or the Owner
Trustee, as the case may be, is not in proper form or is not properly completed,
executed or delivered, it shall be deemed not to have been Received, and
Financial Security or its fiscal agent shall promptly so advise the Indenture
Trustee or the Owner Trustee, as the case may be, and such Trustee may submit an
amended notice.
Under the Policies, "Business Day" will mean any day other than (i) a
Saturday or Sunday or (ii) a day on which banking institutions in The City of
New York, New York are authorized or obligated by law or executive order to be
closed.
Financial Security's obligations under the Note Policy in respect of
Scheduled Payments and under the Certificate Policy in respect of Guaranteed
Distributions shall in each case be discharged to the extent funds are
transferred to the Indenture Trustee or the Owner Trustee, as the case may be,
as provided in the related Policy whether or not such funds are properly applied
by the Indenture Trustee or the Owner Trustee.
Financial Security shall be subrogated to the rights of each Noteholder or
Certificateholder, as the case may be, to receive payments of principal and
interest to the extent of any payment by Financial Security under the related
Policy.
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Claims under the Policies will constitute direct, unsecured and
unsubordinated obligations of Financial Security ranking not less than pari
passu with other unsecured and unsubordinated indebtedness of Financial Security
for borrowed money. Claims against Financial Security under each other financial
guaranty insurance policy issued thereby constitute pari passu claims against
the general assets of Financial Security. The terms of the Policies cannot be
modified or altered by any other agreement or instrument, or by the merger,
consolidation or dissolution of the Trust. The Note Policy may not be cancelled
or revoked prior to distribution in full of all Scheduled Payments and the
Certificate Policy may not be cancelled or revoked prior to distribution in full
of all Guaranteed Distributions with respect to the Certificates. The Policies
are not covered by the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law. The Policies are governed by the laws
of the State of New York. As a result, if a claim is made on the Note Policy for
the benefit of the Noteholders, or a claim is made on the Certificate Policy for
the benefit of the Certificateholders and Financial Security is insolvent and
unable to pay the amount then due under that policy, the Noteholders or
Certificateholders would not be permitted to file a claim against the
Property/Casualty Insurance Fund specified in Article 76 of the New York
Insurance Law. In that circumstance, the Noteholders or Certificateholders would
have recourse against the estate of Financial Security only, as any other
general creditor of Financial Security.
FINANCIAL SECURITY ASSURANCE INC.
GENERAL
Financial Security is a monoline insurance company incorporated in 1984
under the laws of the State of New York. Financial Security is licensed to
engage in financial guaranty insurance business in all 50 states, the District
of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged in the business of
writing financial guaranty insurance, principally in respect of securities
offered in domestic and foreign markets. In general, financial guaranty
insurance consists of the issuance of a guaranty of scheduled payments of an
issuer's securities -- thereby enhancing the credit rating of those
securities -- in consideration for the payment of a premium to the insurer.
Financial Security and its subsidiaries principally insure asset-backed,
collateralized and municipal securities. Asset-backed securities are generally
supported by residential mortgage loans, consumer or trade receivables,
securities or other assets having an ascertainable cash flow or market value.
Collateralized securities include public utility first mortgage bonds and
sale/leaseback obligation bonds. Municipal securities consist largely of general
obligation bonds, special revenue bonds and other special obligations of state
and local governments. Financial Security insures both newly issued securities
sold in the primary market and outstanding securities sold in the secondary
market that satisfy Financial Security's underwriting criteria.
Financial Security is a wholly owned subsidiary of Financial Security
Assurance Holdings Ltd. ("Holdings"), a New York Stock Exchange listed company.
Major shareholders of Holdings include MediaOne Capital Corporation, White
Mountains Insurance Group, Inc., The Tokio Marine and Fire Insurance Co., Ltd.
and XL Capital Ltd. No shareholder of Holdings is obligated to pay any debt of
Financial Security of any claim under any insurance policy issued by Financial
Security or to make any additional contribution to the capital of Financial
Security.
The principal executive offices of Financial Security are located at 350
Park Avenue, New York, New York 10022, and its telephone number at that location
is (212) 826-0100.
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REINSURANCE
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written or reinsured from third parties by Financial Security or any
of its domestic or Bermuda operating insurance company subsidiaries are
generally reinsured among such companies on an agreed-upon percentage
substantially proportional to their respective capital, surplus and reserves,
subject to applicable statutory risk limitations. In addition, Financial
Security reinsures a portion of its liabilities under certain of its financial
guaranty insurance policies with other reinsurers under various quota share
treaties and on a transaction-by-transaction basis. Such reinsurance is utilized
by Financial Security as a risk management device and to comply with certain
statutory and rating agency requirements; it does not alter or limit Financial
Security's obligations under any financial guaranty insurance policy.
RATINGS
Financial Security's insurance financial strength is rated "Aaa" by
Moody's. Financial Security's insurer financial strength is rated "AAA" by
Standard & Poor's and Standard & Poor's (Australia) Pty. Ltd. Financial
Security's claims-paying ability is rated "AAA" by Fitch IBCA, Inc. and Japan
Rating and Investment Information, Inc. Such ratings reflect only the views of
the respective rating agencies, are not recommendations to buy, sell or hold
securities and are subject to revisions or withdrawal at any time by such rating
agencies. See "Risk Factors -- The Ratings of the Securities May be Withdrawn or
Revised Which May Have an Adverse Effect on the Market Price of the Securities."
CAPITALIZATION
The following table sets forth the capitalization of Financial Security and
its wholly owned subsidiaries on the basis of generally accepted accounting
principles as of June 30, 1999 (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1999
-------------
ACTUAL
-------------
(UNAUDITED)
<S> <C>
Deferred Premium Revenue (net of prepaid reinsurance
premiums)................................................. $ 520,986
----------
Surplus Notes............................................... 120,000
----------
Minority Interest........................................... 21,429
----------
Shareholder's Equity:
Common Stock.............................................. 15,000
Additional Paid-In Capital................................ 706,117
Accumulated Other Comprehensive Income (net of deferred
income taxes).......................................... (1,937)
Accumulated Earnings...................................... 418,772
----------
Total Shareholder's Equity.................................. 1,137,952
----------
Total Deferred Premium Revenue, Surplus Notes, Minority
Interest and Shareholder's Equity......................... $1,800,367
==========
</TABLE>
For further information concerning Financial Security, see the Consolidated
Financial Statements of Financial Security and Subsidiaries, and the notes
thereto, incorporated by reference into this Prospectus. Copies of the statutory
quarterly and annual statements filed with the State of New York
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Insurance Department by Financial Security are available upon request to the
State of New York Insurance Department.
INSURANCE REGULATION
Financial Security is licensed and subject to regulation as a financial
guaranty insurance corporation under the laws of the State of New York, its
state of domicile. In addition, Financial Security and its insurance
subsidiaries are subject to regulation by insurance laws of the various other
jurisdictions in which they are licensed to do business. As a financial guaranty
insurance corporation licensed to do business in the State of New York,
Financial Security is subject to Article 69 of the New York Insurance Law which,
among other things, limits the business of each such insurer to financial
guaranty insurance and related lines, requires that each such insurer maintain a
minimum surplus to policyholders, establishes contingency, loss and unearned
premium reserve requirements for each such insurer, and limits the size of
individual transactions ("single risks") and the volume of transactions
("aggregate risks") that may be underwritten by each such insurer. Other
provisions of the New York Insurance Law, applicable to non-life insurance
companies such as Financial Security, regulate, among other things, permitted
investments, payment of dividends, transactions with affiliates, mergers,
consolidations, acquisitions or sales of assets and incurrence of liability for
borrowings.
THE MASTER SERVICER
The Contracts will be serviced by WFS in its capacity as Master Servicer.
While WFS may or may not use a Subservicer in servicing the Contracts, WFS is
referred to as the Master Servicer herein.
WFS, as Master Servicer, will be obligated pursuant to the Sale and
Servicing Agreement, subject to the limitations set forth therein, to service
the Contracts and to repurchase Contracts under certain circumstances if certain
representations and warranties made by WFS are incorrect or if WFS, as Master
Servicer, breaches certain of its servicing obligations under the Sale and
Servicing Agreement, in either case in a manner that materially and adversely
affects the Securityholders. The Master Servicer, may perform its servicing
duties through one or more subservicers (each, a "Subservicer"), provided that
the employment of a Subservicer shall not relieve the Master Servicer from any
liability of the Master Servicer under the Sale and Servicing Agreement.
If the Master Servicer uses a Subservicer, the Master Servicer will enter
into a subservicing agreement with that Subservicer. The subservicing agreement
must not be inconsistent with the terms of the Sale and Servicing Agreement. The
Master Servicer may terminate a subservicing agreement and either service the
related Contracts directly or enter into a new subservicing agreement for those
Contracts with a Subservicer that need not be an affiliate of the Master
Servicer. Notwithstanding any subservicing agreement, the Master Servicer will
remain obligated and liable to the Indenture Trustee, the Owner Trustee and the
Securityholders for servicing and administering the Contracts in accordance with
the Sale and Servicing Agreement as if the Master Servicer alone were servicing
the Contracts. References herein to actions required or permitted to be taken by
the Master Servicer include the actions by a Subservicer.
COLLECTION OF PAYMENTS
The Master Servicer will service the Contracts and will provide certain
accounting and reporting services with respect to the Contracts and the
Securities. The Master Servicer must take all actions necessary to maintain
continuous perfection of the security interests granted by the Obligors in the
Financed Vehicles. The Master Servicer will be obligated to service the
Contracts in accordance with
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the customary and usual servicing procedures employed by financial institutions
that service retail installment sales contracts and/or installment loan
agreements secured by motor vehicles and, to the extent more exacting, the
procedures used for such contracts owned by the Master Servicer. In its
judgment, the Master Servicer may reduce the APR of a delinquent Contract (but
not below the sum of the Pass-Through Rate and the Servicing Fee Percent), may
reduce the principal balance and may extend the scheduled maturity of a
delinquent Contract for up to 90 days in the aggregate past the originally
scheduled date of the last payment on such Contract, so long as the Master
Servicer makes an appropriate Advance as will be required in the Sale and
Servicing Agreement.
The Master Servicer shall deposit in or credit to the Collection Account or
the Holding Account, within two Business Days of receipt, all Net Collections
received on or in respect of the Contracts (except that as to Contracts serviced
by a Subservicer, such proceeds shall be deposited within three Business Days of
receipt by the Subservicer). The Master Servicer will also deposit in or credit
to the Collection Account or the Holding Account, within two Business Days of
receipt, all Net Liquidation Proceeds and Net Insurance Proceeds, after
deducting the amount of any outstanding and unreimbursed Advances. See "Certain
Information Regarding the Securities -- The Accounts and Eligible Investments."
ADVANCES
The Master Servicer will be obligated to advance delinquent payments of
Monthly P&I on individual Rule of 78's Contracts and to advance 30 days of
interest at the sum of the Pass-Through Rate and the Servicing Fee Percent for
each month of delinquency in that Due Period on individual Simple Interest
Contracts (each, an "Advance") to the extent that any Advance, if made, would
not, in the good faith judgment of the Master Servicer, constitute a
Nonrecoverable Advance. A "Nonrecoverable Advance" will be an Advance previously
made or to be made by the Master Servicer which, in the good faith judgment of
the Master Servicer, may not be ultimately recoverable by the Master Servicer
from Liquidation Proceeds, Insurance Proceeds or otherwise. Concurrently with
the furnishing of the related Distribution Date Statement to the Indenture
Trustee and the Owner Trustee, the Master Servicer will deposit in the
Collection Account all Advances, if any, in respect of the related Due Period.
The Master Servicer will not be entitled to any interest on Advances when it is
reimbursed for Advances. The amount of Advances deposited in the Collection
Account for any Distribution Date may be net of amounts otherwise payable to the
Master Servicer on such Distribution Date.
In making Advances, the Master Servicer will be endeavoring to maintain a
regular flow of interest and principal payments to the Securityholders rather
than to guarantee or insure against losses. Advances will be reimbursed to the
Master Servicer out of recoveries on the related Contracts (e.g., late payments
by the Obligor, Net Liquidation Proceeds and Net Insurance Proceeds) or, to the
extent any portion of an Advance is determined to be a Nonrecoverable Advance,
out of unrelated installments of Monthly P&I or prepayment proceeds.
INSURANCE ON FINANCED VEHICLES
Each Obligor on a Contract is required to maintain insurance covering
physical damage to the Financed Vehicle of such Obligor in an amount not less
than the lesser of its actual cash value or the unpaid principal balance under
that Contract; provided, however, that the Master Servicer will not be obligated
to enforce this requirement when the principal balance of a Contract is less
than $4,000 or there are six or fewer months remaining to its scheduled
maturity. The Master Servicer or a Subservicer is required to be named as a loss
payee under the policy of insurance obtained by the Obligor. In addition, to the
extent required by applicable law, the policy of insurance will be delivered
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to the Master Servicer or Subservicer, as appropriate. The Financed Vehicle is
required to be insured against loss and damage due to fire, theft,
transportation, collision and other risks covered by comprehensive coverage. The
Master Servicer shall obtain a limited dual interest insurance policy which
provides coverage for physical damage to, or loss of, a Financed Vehicle if the
Obligor fails to maintain the required insurance and may add the premium for
that insurance to the balance due on the Contract to the extent permitted by
applicable law; provided, however, that the Master Servicer shall not be
required to maintain that insurance in respect of any Financed Vehicle as to
which the related Contract has an unpaid principal balance of less than $4,000
or there are six or fewer months remaining to its Maturity Date. Since Obligors
may choose their own insurers to provide the required coverage, the specific
terms and conditions of their policies vary. The Scheduled Balance of a Contract
will not include any amount for premiums paid by the Master Servicer, and
payments by an Obligor in respect of such financed premium will not be applied
to distributions on the Securities.
SERVICER DETERMINATION AND REPORTS TO TRUSTEES
The Master Servicer will perform monitoring and reporting functions for the
Owner Trustee, the Indenture Trustee and Financial Security. The Master Servicer
will prepare and deliver to the Owner Trustee, the Indenture Trustee and
Financial Security the following:
(a) each Statement to Securityholders and
(b) an additional report covering:
- the aggregate amount, if any, paid by or due from the Master Servicer
or the Seller for the purchase of Contracts which the Master Servicer
or the Seller has become obligated to purchase and
- the net amount of funds which have been deposited in or credited to
the Collection Account or Holding Account.
SERVICING COMPENSATION
The Master Servicer will be entitled to compensation for the performance of
its obligations under the Sale and Servicing Agreement. The Master Servicer
shall be entitled to receive for each Contract from the Monthly P&I paid on or
in respect of that Contract an amount (the "Servicing Fee") equal to one-twelfth
of 1.25% per annum (the "Servicing Fee Percent") of the Scheduled Balance of
that Contract for the related month in respect of which the Monthly P&I for that
month has been collected or advanced. As additional compensation, the Master
Servicer or its designee shall be entitled to retain all late payment charges,
extension fees (the Master Servicer will determine when an extension is to be
granted, subject to the limitations described under "The Master Servicer --
Collection of Payments") and similar items paid in respect of the Contracts. The
Master Servicer or its designee will receive as additional servicing
compensation the amount, if any, by which the outstanding principal balance of a
Contract that is prepaid in full prior to its maturity exceeds the Scheduled
Balance of that Contract. The Master Servicer shall pay all expenses incurred by
it in connection with its servicing activities under the Sale and Servicing
Agreement and shall not be entitled to reimbursement of such expenses except to
the extent they constitute Liquidation Expenses or expenses recoverable under an
applicable insurance policy.
The Servicing Fee will compensate the Master Servicer for:
(a) performing the functions of a third party servicer of the Contracts as
an agent for the Indenture Trustee and the Owner Trustee, including:
- collecting and posting all payments,
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- responding to inquiries of Obligors,
- investigating delinquencies,
- sending payment statements and reporting tax information to Obligors,
- paying costs of collections, and
- policing the collateral; and
(b) administering the Contracts, including:
- accounting for collections, and
- furnishing quarterly and annual statements to the Indenture Trustee
and the Owner Trustee with respect to distributions and generating
federal income tax information and certain taxes, accounting fees,
outsider auditor fees, data processing costs and other costs incurred
in connection with administering the Contracts.
REALIZATION UPON DEFAULTED CONTRACTS
The Master Servicer will liquidate any Contract that goes into default and
as to which no satisfactory arrangements can be made for collection of
delinquent payments. Liquidation of a defaulted Contract may be through
repossession or sale of the Financed Vehicle or otherwise. In connection with a
repossession or other conversion, the Master Servicer will follow normal and
usual procedures for holders of motor vehicle retail installment sales contracts
and installment loans. In this regard, the Master Servicer may sell the Financed
Vehicle at a repossession or other sale. (Sale and Servicing Agreement, Section
4.03)
YEAR 2000 COMPLIANCE
Many computer systems process transactions involving dates by using only
two digits to represent the year of the transaction (i.e., "98" for 1998),
rather than the full four digits of the year involved. These computer systems
could fail or produce erroneous results during the transition from 1999 to 2000.
This problem could affect a wide variety of automated information management
systems, the most critical of these functions from the perspective of the Trust
are the billing and collection systems used by the Master Servicer.
The Master Servicer has advised the Seller that during 1997 the Master
Servicer initiated the process of preparing its computer systems and
applications to be year 2000 compliant, including in particular those systems
used in connection with the billing and collection of Obligors as to the
Contracts to be sold to the Trust. This process involves modifying or replacing
certain hardware and software maintained by the Master Servicer, as well as
communicating with external service providers to ensure that they are taking the
necessary actions to remedy their year 2000 compliance issues. The Master
Servicer has advised the Seller that it has substantially modified all of its
information management systems and applications, both hardware and software, and
completed testing and implementation during the third quarter of 1999. The
Seller believes, based upon its discussions with the Master Servicer, that the
Master Servicer and the Master Servicer's external service providers will be
year 2000 compliant with respect to the systems and applications relevant to the
Master Servicer's activities for the Trust in advance of January 1, 2000. The
Master Servicer, as an operating subsidiary of the Bank, is subject to
regulation by the Office of Thrift Supervision (the "OTS"). The OTS is providing
vigorous oversight to the year 2000 compliance activities of the thrift
institutions and their subsidiaries for which the OTS is the primary federal
supervisory agency.
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Based upon the information currently available to the Seller, the Seller
does not anticipate that there will be any cost to the Trust to address year
2000 issues or that such issues will have a material adverse effect upon the
cash flows due the Trust from which payments to its Securityholders will be
made. If the Master Servicer, Financial Security, the Indenture Trustee or the
Owner Trustee do not have computerized systems that are year 2000 compliant by
the year 2000, the ability to service the Contracts (in the case of the Master
Servicer), to respond to a claim (in the case of Financial Security), to make
distributions to the Noteholders (in the case of the Indenture Trustee) and to
make distributions to the Certificateholders (in the case of the Owner Trustee)
may be materially and adversely affected.
CERTAIN LEGAL ASPECTS OF THE CONTRACTS
GENERAL
The Contracts are "chattel paper" as defined in the Uniform Commercial Code
as in effect in California and the other states in which the Contracts are
originated (the "UCC"). Pursuant to the UCC, an ownership interest in chattel
paper may be perfected by possession of the chattel paper or filing a UCC-1
financing statement with the Secretary of State or other central filing office
in the appropriate state as required by the applicable UCC.
WFS and the Seller will take or cause to be taken those actions as are
required to perfect the Trust's rights in the Contracts and will represent and
warrant that the Trust, subject to the interest of Financial Security under the
Insurance Agreement pursuant to which the Policies will be issued, has good
title, free and clear of liens and encumbrances, to each Contract on the Closing
Date. Under the Sale and Servicing Agreement, WFS, as Master Servicer (or one or
more Subservicers), will have custody of the Contracts following the sale of the
Contracts to the Trust and will hold the Contracts as bailee for the benefit of
the Trust. However, the Contracts will not be physically marked to indicate the
ownership interest thereof by the Trust. UCC-1 financing statements will be
filed with the California Secretary of State to perfect by filing and to give
notice of the Trust's ownership interest in the Contracts. If, through
inadvertence or otherwise, any of the Contracts were sold to another party who
purchased those Contracts in the ordinary course of its business and took
possession of them, the purchaser would acquire an interest in those Contracts
superior to the interests of the Trust if the purchaser acquired the Contracts
in good faith, for value and without actual knowledge of the Trust's ownership
interest in those Contracts. The Master Servicer will agree in the Sale and
Servicing Agreement to take all necessary actions to preserve and protect the
Trust's ownership interest in the Contracts. The Seller will represent and
warrant that each Contract is secured by a Financed Vehicle. Notwithstanding the
failure of the Trust to have obtained a valid, first priority ownership interest
in a Contract, Financial Security will remain unconditionally and irrevocably
obligated on its guarantee of Scheduled Payments payable to Noteholders and
Guaranteed Distributions payable to Certificateholders on each Distribution
Date. See "The Policies."
SECURITY INTERESTS IN THE FINANCED VEHICLES
All of the Financed Vehicles were registered in the State of California or
another of the states listed above under "The Contracts Pool" at the time of
origination of the related Contracts. Perfection of security interests in motor
vehicles is generally governed by state certificate of title statutes or by the
motor vehicle registration laws of the state in which each vehicle is located.
Security interests in vehicles registered in the State of California (the state
in which the largest number of Financed Vehicles is located) may be perfected by
depositing with the California Department of Motor Vehicles a properly endorsed
certificate of title showing the secured party as
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legal owner or an application for an original registration together with an
application for registration of the secured party as legal owner. Security
interests in vehicles registered in most other states are perfected, generally,
in a similar manner. California and some other states permit the required
documents to perfect a security interest to be filed electronically as well as
physically. The Seller will represent and warrant to the Trust in the Sale and
Servicing Agreement that all steps necessary to obtain a perfected first
priority security interest with respect to the Financed Vehicles securing the
Contracts have been taken. If the Master Servicer fails, because of clerical
error or otherwise, to effect or maintain such notation for a Financed Vehicle,
the Trust may not have a first priority security interest in that Financed
Vehicle.
All retail installment sales contracts purchased by WFS name WFS as obligee
or assignee and as the secured party. WFS also takes all actions necessary under
the laws of the state in which the related vehicles are located to perfect its
security interest in those vehicles, including, where applicable, having a
notation of its lien recorded on the related certificate of title and obtaining
possession of the certificates of title.
The Seller will sell the Contracts and assign its security interests in the
Financed Vehicles to the Trust and Financial Security. However, because of the
administrative burden and expense, neither the Trust nor Financial Security will
amend any certificate of title to identify the Trust or Financial Security as
the new secured party nor will the certificates of title be delivered to the
Trustee. Accordingly, WFS will continue to be named as the secured party on the
certificates of title for the Financed Vehicles relating to Contracts originated
by it. Under the law of California and most other states, the assignment of the
Contracts is an effective conveyance of a security interest without amendment of
any lien noted on a vehicle's certificate of title, and the new secured party
succeeds thereby to the assignor's rights as secured party. However, there
exists a risk in not identifying the Trust as the new secured party on the
certificates of title that, through fraud or negligence, the security interest
of the Trust in one or more Financed Vehicles could be released.
In the absence of fraud or forgery by the Financed Vehicle owner or
administrative error by state recording officials, notation of the lien of WFS
on the certificates of title or in the electronic records of the state officials
where electronic titles are permitted should be sufficient to protect the Trust
against the rights of subsequent purchasers of a Financed Vehicle or subsequent
lenders who take a security interest in a Financed Vehicle. If there are any
Financed Vehicles as to which WFS has failed to perfect the security interest
assigned to the Trust, the security interest would be subordinate to, among
others, subsequent purchasers of the Financed Vehicles and holders of perfected
security interests.
In the event that the owner of a Financed Vehicle relocates to a state
other than the state in which the Financed Vehicle is registered, under the laws
of most states the perfected security interest in the Financed Vehicle would
continue for four months after that relocation and thereafter, in most
instances, until the owner registers the Financed Vehicle in that state. A
majority of states, including California, generally require surrender of a
certificate of title to initially register in that state a vehicle originally
registered in another state. Therefore, the Master Servicer on behalf of the
Trust must surrender possession, if it holds the certificate of title to a
relocated Financed Vehicle, for the Financed Vehicle owner to effect the
registration. If the Financed Vehicle owner moves to a state that provides for
notation of lien on the certificate of title to perfect the security interests
in the Financed Vehicle, WFS, absent clerical errors or fraud, would receive
notice of surrender of the certificate of title if WFS' lien is noted thereon.
Accordingly, WFS will have notice and the opportunity to reperfect the security
interest in the Financed Vehicle in the state of relocation. If the Financed
Vehicle owner moves to a state which does not require surrender of a certificate
of title for registration of a motor vehicle, registration in that state could
defeat perfection. In the ordinary course of servicing its portfolio of motor
vehicle loans, WFS takes steps to effect reperfection upon
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receipt of notice of reregistration or information from the obligor as to
relocation. Similarly, when an Obligor under a Contract sells a Financed
Vehicle, the Master Servicer must surrender possession of the certificate of
title or will receive notice as a result of its lien noted thereon and
accordingly will have an opportunity to require satisfaction of the related
Contract before release of the lien. Under the Sale and Servicing Agreement, the
Master Servicer, at its cost, will be obligated to maintain the continuous
perfection of security interests in the Financed Vehicles.
Under the law of California and most other states, liens for unpaid taxes
and possessory liens for storage of and repairs performed on a motor vehicle
take priority even over a perfected security interest in that vehicle. The
Internal Revenue Code of 1986, as amended, also grants priority to certain
federal tax liens over the lien of a secured party. The laws of certain states
and federal law permit the confiscation of motor vehicles by governmental
authorities under certain circumstances if used in unlawful activities, which
may result in the loss of a secured party's perfected security interest in a
confiscated vehicle. The Seller will represent in the Sale and Servicing
Agreement that, as of the Closing Date, the security interest in each Financed
Vehicle is prior to all other present liens upon and security interests in that
Financed Vehicle. However, liens for repairs or taxes could arise at any time
during the term of a Contract. No notice will be given to the Trustees, the
Master Servicer or Securityholders in the event such a lien or confiscation
arises and any such lien or confiscation arising after the Closing Date would
not give rise to the Seller's repurchase obligations under the Sale and
Servicing Agreement.
ENFORCEMENT OF SECURITY INTERESTS IN FINANCED VEHICLES
The Master Servicer, on behalf of the Trust, may take action itself or
through one or more Subservicers to enforce its security interest with respect
to defaulted Contracts by repossession and resale of the Financed Vehicles
securing such defaulted Contracts. In addition to the provisions of the UCC,
under California law the Contracts originated in California are subject to the
provisions of its Rees-Levering Motor Vehicle Sales and Finance Act (the
"Rees-Levering Act"). Contracts originated in other states are subject to retail
installment sales laws and similar laws of those states including in many of
those states their version of the Uniform Consumer Credit Code. The provisions
of the Rees-Levering Act and similar laws of other states control in the event
of a conflict with the provisions of the UCC. Under the UCC and laws applicable
in most states, a creditor can, without prior notice to the debtor, repossess a
motor vehicle securing a loan by voluntary surrender, by "self-help"
repossession without breach of peace, and by judicial process. The Rees-Levering
Act and similar laws of other states place restrictions on repossession sales,
including notice to the debtor of the intent to sell and of the debtor's right
to redeem the vehicle. In addition, the UCC requires commercial reasonableness
in the conduct of the sale.
In the event of repossession and resale of a Financed Vehicle, the Master
Servicer for the benefit of the Trust would be entitled to be paid out of the
sale proceeds before the proceeds could be applied to the payment of the claims
of unsecured creditors or the holders of subsequently perfected security
interests or, thereafter, to the debtor.
Under the UCC and laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from a debtor for any deficiency on repossession
and resale of the motor vehicle securing such debtor's loan. However, some
states impose prohibitions or limitations on deficiency judgments. Under
California law the proceeds from the resale of the motor vehicle securing the
debtor's loan are required to be applied first to the expenses of resale and
repossession, and if the remaining proceeds are not sufficient to repay the
indebtedness, the creditor may seek a deficiency judgment for the balance. The
priority of application of proceeds of sale as to repossessed vehicles under the
Contracts originated in most other states is similar.
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Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws, may limit or delay the ability of a creditor to repossess
and resell collateral or enforce a deficiency judgment.
In the event that deficiency judgments are not satisfied or are satisfied
at a discount or are discharged in whole or in part in bankruptcy proceedings,
including proceedings under Chapter 13 of the Bankruptcy Reform Act of 1978, as
amended, the loss will be borne by the Trust.
OTHER MATTERS
The so-called "holder-in-due-course" rule of the Federal Trade Commission
is intended to defeat the ability of the transferor of a consumer credit
contract which is the seller of goods which give rise to the transaction (and
certain related lenders and assignees) to transfer such contract free of notice
of claims by the debtor thereunder. The effect of this rule is to subject the
assignee of a transferred contract to all claims and defenses which the debtor
could assert against the seller of goods. Liability under this rule, which would
be applicable to the Trust and Financial Security, is limited to amounts paid
under a Contract; however, the Obligor may also assert the rule to set off
remaining amounts due as a defense against a claim brought by the Trustee
against that Obligor.
The courts have imposed general equitable principles on repossession and
litigation involving deficiency balances. These equitable principles may have an
effect of relieving an Obligor from some or all of the legal consequences of a
default.
Numerous other federal and state consumer protection laws, regulations and
rules impose requirements applicable to the origination and servicing of the
Contracts, including the Truth-in-Lending Act (and Federal Reserve Board
Regulation Z), the Federal Trade Commission Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Equal Credit Opportunity Act (and Federal
Reserve Board Regulation B), the Fair Debt Collection Practices Act, the
Magnuson-Moss Warranty Act, state adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code and the California Rees-Levering Act and
motor vehicle retail installment sale acts in other states, and similar laws and
rules. Also, the laws of certain states impose finance charge ceilings and other
restrictions on consumer transactions and require contract disclosures in
addition to those required under federal law. These requirements impose specific
statutory liabilities upon creditors who fail to comply with their provisions.
In some cases, this liability could affect the ability of the Trustee as an
assignee to enforce noncomplying Contracts. The Seller will represent and
warrant in the Sale and Servicing Agreement that each of the Contracts, and the
sale of the Financed Vehicles sold thereunder, complied with all material
requirements of such laws.
REPURCHASE OBLIGATION
Under the Sale and Servicing Agreement, the Seller will make
representations and warranties relating to validity, subsistence, perfection and
priority of the security interest in each Financed Vehicle as of the Closing
Date. Accordingly, if any defect exists in the perfection of the security
interest in any Financed Vehicle as of the Closing Date, including any defect
arising from the violation of laws or rules, and that defect materially and
adversely affects the interests of the Securityholders, the Indenture Trustee,
the Owner Trustee or Financial Security, that defect would constitute a breach
of a representation and warranty under the Sale and Servicing Agreement and, if
uncured, would create an obligation of the Seller to repurchase the affected
Contract unless the breach is cured. Additionally, in the Sale and Servicing
Agreement the Master Servicer will make certain representations, warranties and
affirmative covenants regarding, among other things, the maintenance of the
security interest in each Financed Vehicle, the breach of which would create an
obligation of the Master Servicer to repurchase any affected Contract unless the
breach is cured.
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THE SELLER
The Seller is a wholly owned, limited-purpose operating subsidiary of WFS
which was incorporated under the laws of the State of California on October 24,
1985. The principal office of the Seller is 23 Pasteur Road, Irvine, California
92618.
The Seller was organized principally for the purpose of purchasing retail
installment sales contracts and installment loans from the Bank in connection
with its activities as a finance subsidiary of the Bank. Effective May 1, 1995,
ownership of the Seller was transferred to WFS and it is now a limited purpose
operating subsidiary of WFS. The Seller has not and will not engage in any
activity other than (i) acquiring, owning, holding, selling, transferring,
assigning, pledging or otherwise dealing in installment sales contracts and
installment loans secured by automobiles and light-duty trucks or (ii)
authorizing, issuing, selling and delivering one or more series of obligations
consisting of one or more classes of bonds or pass-through certificates
collateralized by installment sales contracts and installment loans secured by
automobiles and light-duty trucks, which bonds or pass-through certificates are
rated in the highest available category by at least one nationally recognized
statistical rating agency.
The Seller's Articles of Incorporation limit the activities of the Seller
to the above purposes and to any activities incidental to and necessary for such
purposes.
BREACH OF REPRESENTATIONS AND WARRANTIES; DEFECTIVE CONTRACT DOCUMENTATION
In the Sale and Servicing Agreement, the Seller will make certain
representations and warranties with respect to each Contract as of the Closing
Date, including but not limited to, perfection, validity, enforceability of and
the absence of liens prior to the security interest granted pursuant to each
Contract, title of the Trust in and to the Contracts, validity and
enforceability of the Contracts as against the related Obligor, and collision
and comprehensive insurance coverage related to each Financed Vehicle. If (i)
any of those representations and warranties is found to have been incorrect as
of the time it was made or any document evidencing or securing a Contract is
found to be defective or not to be contained in the Contract files, and (ii) the
same materially and adversely affects the interest of the Certificateholders,
the Indenture Trustee, the Owner Trustee or Financial Security in and to that
Contract, the Seller must cure the defect or eliminate or otherwise cure the
circumstances or condition in respect of which such representation or warranty
is incorrect within 90 days of the discovery thereof. If the defect is not cured
within that 90-day period, the Seller must repurchase the Contract affected by
the defect at a price equal to the outstanding principal amount of that Contract
plus accrued interest thereon to the last Due Date in the Due Period in which
the repurchase occurs. (Sale and Servicing Agreement, Section 3.02)
WFS
GENERAL
WFS Financial Inc ("WFS" or, in its capacity as Master Servicer, the
"Master Servicer") is an auto finance company incorporated in California in
1988. WFS was formerly known as Westcorp Financial Services, Inc. ("Westcorp
Financial"), a wholly owned operating subsidiary of the Bank and a licensed
consumer finance company. Prior to May 1, 1995, the auto finance activities
described in this Prospectus were conducted separately by the Bank, through its
auto finance division, and by Westcorp Financial. Effective May 1, 1995, the
Bank's auto finance division was combined with the consumer auto finance
activities of Westcorp Financial, with Westcorp Financial then changing its
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corporate name to WFS Financial Inc. In August 1995, WFS completed an initial
public offering of 19.7% of its common stock. WFS is now a majority owned
operating subsidiary of the Bank.
WFS purchases contracts in both the prime and non-prime credit quality
segments of the auto finance market. During 1998, WFS purchased approximately
68% of its contracts from the prime credit quality segment and 32% from the
non-prime segment, and during the nine months ended September 30, 1999, WFS
purchased approximately 70% of its contracts from the prime credit quality
segment and 30% from the non-prime segment. WFS purchases the majority of its
contracts from franchised dealers and to a lesser extent from independent
dealers. During 1998, contracts for new and used vehicles represented 18% and
82%, respectively, of WFS' volume of contracts purchased, and during the nine
months ended September 30, 1999, contracts for new and used vehicles represented
22% and 76%, respectively, of WFS volume of contracts purchased.
WFS is an operating subsidiary of the Bank. As an operating subsidiary, WFS
is subject to regulation and supervision by the OTS and the Federal Deposit
Insurance Corporation ("FDIC"). At September 30, 1999, WFS had total assets of
$1,914.2 million, total liabilities of $1,715.0 million and stockholders' equity
of $199.2 million. As of September 30, 1999, WFS' net portfolio of contracts
totalled approximately $1.2 billion.
WFS' revenues are derived principally from contractual servicing fees, the
retained interest on contracts sold for which servicing is retained, interest on
contracts not sold and fee income including late fees, deferment fees,
documentation fees and other fees, interest charged on its portfolio of
contracts and, to a lesser extent, gain on other investments. Interest on
borrowings and general and administrative costs are WFS' major expense items.
The principal executive offices of WFS are located at 23 Pasteur Road,
Irvine, California 92618 and its telephone number is (949) 727-1000.
BUSINESS ACTIVITIES
WFS is engaged principally in the business of originating contracts secured
by automobiles and light duty trucks from new and used car dealers and the
public. WFS currently conducts its operations through its principal office and
45 production offices serving 43 states.
WII
WFS Investments, Inc. ("WII") is a wholly owned limited-purpose, operating
subsidiary of WFS. WII was incorporated in California on June 11, 1996, for the
purpose of purchasing an ownership interest in the Trust and similar trusts. WII
is limited by its Articles of Incorporation from engaging in any business
activities not incidental or necessary to its stated purpose.
The principal executive office of WII is located at 23 Pasteur Road,
Irvine, California 92618 and its telephone number is (949) 727-1000.
THE BANK
GENERAL
Western Financial Bank (the "Bank") is a federally chartered savings
association. As of September 30, 1999, the Bank had total assets of $4.3
billion, total deposits of $2.3 billion and stockholder's equity of $340 million
on a generally accepted accounting principles basis. The Bank is
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a wholly owned subsidiary of Westcorp. Westcorp is a financial services holding
company which operates principally through the Bank, its wholly owned
subsidiary, and through WFS.
As a federally chartered savings association, the Bank is subject to
regulation and supervision by the OTS and the FDIC. The Bank is a member of the
Federal Home Loan Bank of San Francisco.
The principal executive office of the Bank is located at 16485 Laguna
Canyon Road, Irvine, California 92618 and its telephone number is (949)
727-1100.
BUSINESS ACTIVITIES
The Bank is engaged principally in the business of attracting deposits
from, and making real estate secured loans to the public. The Bank has offices
in 10 states, including 25 retail banking offices in California. Funds for
lending are obtained from deposits, borrowings, payments on existing loans and
contracts and sales of loans and contracts.
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the purchase, ownership and disposition of the Securities. This
summary is based upon laws, regulations, rulings and decisions currently in
effect, all of which are subject to change. The discussion does not deal with
all federal tax consequences applicable to all categories of investors, some of
which may be subject to special rules contained within the Internal Revenue Code
of 1986, as amended (the "Code"), and regulations promulgated thereunder.
Investors should consult their own tax advisors to determine the federal,
state, local and other tax consequences of the purchase, ownership and
disposition of the Securities. Prospective investors should note that no rulings
have been or will be sought from the Internal Revenue Service (the "IRS") with
respect to any of the federal income tax consequences discussed below, and no
assurance can be given that the IRS will not take contrary positions. Moreover,
there are no cases or IRS rulings on transactions similar to those described
herein with respect to the Trust, involving both debt and equity interests
issued by a trust with terms similar to those of the Notes and the Certificates.
Prospective investors are urged to consult their own tax advisors in determining
the federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of the Securities.
This summary does not purport to deal with all aspects of federal income
taxation that may be relevant to investors in light of their individual
investment circumstances (e.g., financial institutions, broker-dealers, life
insurance companies and tax-exempt organizations).
TAX CHARACTERIZATION OF TRUSTS
In the opinion of Mitchell, Silberberg & Knupp LLP, special tax counsel to
the Seller, the Trust will not be an association (or a publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion is based on the assumption that the terms of the Trust Agreement and
related documents will be complied with, and on that counsel's conclusions that
the nature of the income of the Trust will exempt it from the rule that certain
publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax purposes,
it would be subject to corporate income tax on its taxable income. The Trust's
taxable income would include all its income on the related Contracts, which may
be reduced by its interest expense on the Notes. Any corporate
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income tax could materially reduce cash available to make payments on the Notes
and distributions on the Certificates, and Certificateholders could be liable
for any such tax that is unpaid by the Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The Seller will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for federal income tax purposes. Mitchell, Silberberg & Knupp LLP, special tax
counsel to the Seller, has rendered an opinion that the Notes will be classified
as debt for federal income tax purposes. All of the discussion below assumes
this characterization of the Notes is correct.
OID. The discussion below assumes that all payments on the Notes are
denominated in U.S. dollars. Moreover, the discussion assumes that the interest
formula for the Notes meets the requirements for "qualified stated interest"
under Treasury regulations relating to original issue discount ("OID"), and that
any OID on the Notes (i.e., any excess of the principal amount of the Notes over
their issue price) does not exceed a de minimis amount (i.e., 1/4% of their
principal amount multiplied by the number of full years included in their term),
all within the meaning of such OID regulations.
Interest Income on the Notes. Based on the above assumptions, except as
discussed in the following paragraph, the Notes will not be considered issued
with OID. The stated interest thereon will be taxable to a Noteholder as
ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder of a
Note issued with a de minimis amount of OID must include such OID in income, on
a pro rata basis, as principal payments are made on the Note. A purchaser who
buys a Note for more or less than its principal amount will generally be
subject, respectively, to the premium amortization or market discount rules of
the Code.
However, because a failure to pay interest currently on the Notes is not a
default and does not give rise to a penalty, under the OID regulations the Notes
might be viewed as having been issued with OID. This interpretation would not
significantly affect accrual basis holders of Notes, although it would somewhat
accelerate taxable income to cash basis holders by in effect requiring them to
report interest income on the accrual basis.
Sale or Other Disposition. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the holder's
cost for the Note, increased by any market discount, acquisition discount, OID
and gain previously included by such Noteholder in income with respect to the
Note and decreased by the amount of bond premium (if any) previously amortized
and by the amount of principal payments previously received by such Noteholder
with respect to such Note. Any gain or loss will be capital gain or loss if the
Note was held as a capital asset, except for gain representing accrued interest
and accrued market discount not previously included in income. Capital losses
generally may be used only to offset capital gains.
Foreign holders. Interest payments made (or accrued) to a Noteholder who is
a nonresident alien, foreign corporation or other non-United States person (a
"foreign person") generally will be considered "portfolio interest," and
generally will not be subject to United States federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent shareholder"
of the Trust or the Seller (including a holder of 10% of outstanding Notes or
Certificates) or a "controlled foreign corporation" with respect to which the
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Trust or the Seller is a "related person" within the meaning of the Code and
(ii) provides the Trustee or other person who is otherwise required to withhold
U.S. tax with respect to the Notes with an appropriate statement (on Form W-8 or
a similar form), signed under penalty of perjury, certifying that the beneficial
owner of the Note is a foreign person and providing the foreign person's name
and address. If a Note is held through a securities clearing organization or
certain other financial institutions, the organization or institution may
provide the relevant signed statement to the withholding agent; in that case,
however, the signed statement must be accompanied by a Form W-8 or substitute
form provided by the foreign person that owns the Note. If that interest is not
portfolio interest, then it will be subject to United States federal income and
withholding tax at a rate of 30%, unless reduced or eliminated pursuant to an
applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt holder such
as a corporation, tax exempt organization, qualified pension and profit sharing
trust, individual retirement account or nonresident alien who provides
certification as to status as a nonresident) will be required to provide, under
penalty of perjury, a certificate containing the holder's name, address, correct
federal taxpayer identification number and a statement that the holder is not
subject to backup withholding. Should a nonexempt Noteholder fail to provide the
required certification, the Trust will be required to withhold 31% of the amount
otherwise payable to the holder, and remit the withheld amount to the IRS as a
credit against the holder's federal income tax liability.
Possible Alternative Treatments of the Notes. If, contrary to the opinion
of special tax counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for federal income tax purposes, the Notes might be
treated as equity interests in the Trust. If so treated, the Trust might be
treated as a publicly traded partnership taxable as a corporation with the
adverse consequences described above (and the resulting taxable corporation
would not be able to reduce its taxable income by deductions for interest
expense on Notes recharacterized as equity). Alternatively, and most likely in
the view of special tax counsel, the Trust might be treated as a publicly traded
partnership that would not be taxable as a corporation because it would meet
certain qualifying income tests. Nonetheless, treatment of the Notes as equity
interests in a publicly traded partnership could have adverse tax consequences
to certain holders. For example, income to certain tax-exempt entities
(including pension funds) would be "unrelated business taxable income", income
to foreign holders generally would be subject to U.S. tax and U.S. tax return
filing and withholding requirements, and individual holders might be subject to
certain limitations on their ability to deduct their share of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Treatment of Trust as a Partnership. The Seller and the Master Servicer
will agree, and the related Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificateholders and the
Seller, and the Notes being debt of the partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificates, the
Notes, the Seller and the Master Servicer is not certain because there is no
authority on transactions closely comparable to that contemplated herein.
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A variety of alternative characterizations are possible. For example, the
Trust may be treated as a trust rather than a partnership for federal tax
purposes. Or, because the Certificates have certain features characteristic of
debt, the Certificates might be considered debt of the Seller or the Trust. Any
such characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership and that all payments on the Certificates are denominated in U.S.
dollars.
Partnership Taxation. As a partnership, the Trust will not be subject to
federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the related Contracts
(including appropriate adjustments for market discount, OID and bond premium)
and any gain upon collection or disposition of such Contracts. The Trust's
deductions will consist primarily of interest accruing with respect to the
Notes, servicing and other fees, and losses or deductions upon collection or
disposition of Contracts.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (i.e., the
Trust Agreement and related documents). The Trust Agreement will provide, in
general, that the Certificateholders will be allocated taxable income of the
Trust for each month equal to the sum of (i) the interest that accrues on the
Certificates in accordance with their terms for such month, including interest
accruing at the Pass-Through Rate for such month and interest on amounts
previously due on the Certificates but not yet distributed; (ii) any Trust
income attributable to discount on the related Contracts that corresponds to any
excess of the principal amount of the Certificates over their initial issue
price; (iii) prepayment premium payable to the Certificateholders for such
month; and (iv) any other amounts of income payable to the Certificateholders
for such month. Such allocation will be reduced by any amortization by the Trust
of premium on Contracts that corresponds to any excess of the issue price of
Certificates over their principal amount. All remaining taxable income of the
Trust will be allocated to the Seller and WII, in the proportion of 99% and 1%,
respectively. Based on the economic arrangement of the parties, this approach
for allocating Trust income should be permissible under applicable Treasury
regulations, although no assurance can be given that the IRS would not require a
greater amount of income to be allocated to Certificateholders. Moreover, even
under the foregoing method of allocation, Certificateholders may be allocated
income equal to the entire Pass-Through Rate plus the other items described
above, even though the Trust might not have sufficient cash to make current cash
distributions of such amount. Thus, cash basis holders will in effect be
required to report income from the Certificates on the accrual basis and
Certificateholders may become liable for taxes on Trust income even if they have
not received cash from the Trust to pay such taxes. In addition, because tax
allocations and tax reporting will be done on a uniform basis for all
Certificateholders but Certificateholders may be purchasing Certificates at
different times and at different prices, Certificateholders may be required to
report on their tax returns taxable income that is greater or less than the
amount reported to them by the Trust.
All of the taxable income allocated to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees to
the Master Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole or in
part and might result in such holder being taxed on an amount of income that
exceeds the amount of cash actually distributed to such holder over the life of
the Trust.
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The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Contract, the Trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Contracts will not be issued
with OID, and, therefore, the Trust should not have OID income. However, the
purchase price paid by the Trust for the related Contracts may be greater or
less than the remaining principal balance of the Contracts at the time of
purchase. If so, the Contracts will have been acquired at a premium or discount,
as the case may be. As indicated above, the Trust will make this calculation on
an aggregate basis, but might be required to recompute it on a
Contract-by-Contract basis.
If the Trust acquires the Contracts at a market discount or premium, it
will elect to include any such discount in income currently as it accrues over
the life of such Contracts or to offset any such premium against interest income
on such Contracts. As indicated above, a portion of such market discount income
or premium deduction may be allocated to Certificateholders.
Section 708 Termination. Pursuant to final Treasury regulations issued May
9, 1997, under Section 708 of the Code, a sale or exchange of 50 percent or more
of the capital and profits in the Trust would cause a deemed contribution of the
assets of the Trust (the "Old Partnership") to a new partnership (the "New
Partnership") in exchange for interests in the New Partnership. Such interests
would be deemed distributed to the partners of the Old Partnership in
liquidation thereof.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
A Certificateholder's tax basis in a Certificate will generally equal the
holder's cost increased by the holder's share of Trust income (includible in
income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the amount
realized on a sale of a Certificate would include the holder's share of the
Notes and other liabilities of the Trust. A holder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount on the related Contracts would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of such month. As a result, a holder purchasing Certificates may
be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual transaction.
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The use of a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Seller will
be authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder had.
The tax basis of the Trust's assets will not be adjusted to reflect that higher
(or lower) basis unless the Trust were to file an election under Section 754 of
the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificateholders might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificateholder's allocable share of items of Trust
income and expense to holders and the IRS on Schedule K-1. The Trust will
provide the Schedule K-l information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (a) the name, address and identification number of such person, (b)
whether such person is a United States person, a tax-exempt entity, a foreign
government or an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (c) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
WII will be designated as the tax matters partner for the Trust in the
Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
69
<PAGE> 71
Tax Consequences to Foreign Certificateholders. It is not clear whether the
Trust would be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust would be engaged in a trade or business in the United States for
such purposes, the Trust will withhold as if it were so engaged in order to
protect the Trust from possible adverse consequences of a failure to withhold.
The Trust expects to withhold on the portion of its taxable income that is
allocable to foreign Certificateholders pursuant to Section 1446 of the Code, as
if such income were effectively connected to a U.S. trade or business, at a rate
of 35% for foreign holders that are taxable as corporations and 39.6% for all
other foreign holders. These rates may be increased by future tax legislation.
Subsequent adoption of Treasury regulations or the issuance of other
administrative pronouncements may require the Trust to change its withholding
procedures. In determining a holder's withholding status, the Trust may rely on
IRS Form W-8, IRS Form W-9 or the holder's certification of nonforeign status
signed under penalty of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust's income. Each foreign holder must obtain
a taxpayer identification number from the IRS and submit that number to the
Trust on Form W-8 in order to assure appropriate crediting of the taxes
withheld. A foreign holder generally would be entitled to file with the IRS a
claim for refund with respect to taxes withheld by the Trust, taking the
position that no taxes were due because the Trust was not engaged in a U.S.
trade or business. However, interest payments made (or accrued) to a
Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard to
the income of the Trust. If these interest payments are properly characterized
as guaranteed payments, then the interest will not be considered "portfolio
interest". As a result, Certificateholders will be subject to United States
federal income tax and withholding tax at a rate of 30%, unless reduced or
eliminated pursuant to an applicable treaty. In such case, a foreign holder
would only be entitled to claim a refund for that portion of the taxes in excess
of the taxes that should be withheld with respect to the guaranteed payments.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
SECURITYHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
SECURITIES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
CALIFORNIA INCOME TAX CONSEQUENCES
In the opinion of Mitchell, Silberberg & Knupp LLP, special tax counsel to
the Seller, the Trust will not be an association taxable as a corporation for
California income tax purposes. This opinion will be based on the assumption
that the terms of the Trust Agreement and related documents will be complied
with. Mitchell, Silberberg & Knupp LLP has rendered an opinion that
Certificateholders and Noteholders who are not residents of or otherwise subject
to tax in California will not, solely by reason of their acquisition of an
interest in the Certificates or any Class of Notes, respectively, be subject to
California income, franchise, excise or similar taxes with respect to interest
on the Certificates or any Class of Notes, respectively, or with respect to any
of the other Trust Property.
70
<PAGE> 72
Investors should consult their own tax advisors to determine the state,
local and other tax consequences to them of the purchase, ownership and
disposition of the Securities.
ERISA CONSIDERATIONS
OVERVIEW
The Employee Retirement Income Security Act of 1974, as amended, imposes
certain restrictions on employee benefit plans subject to ERISA ("Plans") and on
persons who are parties in interest or disqualified persons ("parties in
interest") with respect to such Plans which would affect purchases of Securities
by or on behalf of Plans. Certain employee benefit plans, such as governmental
plans and church plans (if no election has been made under Section 410(d) of the
Code), are not subject to the requirements of ERISA and assets of those plans
may be invested in Certificates without regard to the ERISA considerations
described below, subject to the provisions of other applicable federal and state
law, including, for any government or church plan qualified under Section 401(a)
of the Code and exempt from taxation under Section 501(a) of the Code, the
prohibited transaction rules set forth in Section 503 of the Code.
Investments by Plans are subject to ERISA's general fiduciary requirements,
including the requirement of investment prudence and diversification,
requirements respecting delegation of investment authority and the requirement
that a Plan's investment be made in accordance with the documents governing the
Plan.
PROHIBITED TRANSACTIONS
Section 406 of ERISA prohibits parties in interest with respect to a Plan
from engaging in certain transactions involving a Plan and its assets unless a
statutory or administrative exemption applies to the transaction. Section 4975
of the Code and Section 502(i) of ERISA impose certain excise taxes on such
prohibited transactions. Securities purchased by a Plan would be assets of the
Plan. Under regulations issued by the U.S. Department of Labor, the Contracts in
certain circumstances may also be deemed to be assets of each Plan that
purchases Securities. If this were so, persons that cause a Plan to acquire
Securities or that sponsor or insure the related Contracts or manage, control or
service the Contracts may be subject to the fiduciary responsibility provisions
of ERISA and the prohibited transaction provisions of Section 4975 of the Code
in the absence of a statutory or administrative exemption.
THE NOTES
The Notes may be purchased by a Plan subject to ERISA or Section 4975 of
the Code. A fiduciary of a Plan must determine that the purchase of a Note is
consistent with its fiduciary duties under ERISA and does not result in a
nonexempt prohibited transaction as defined in Section 406 of ERISA or Section
4975 of the Code.
The Notes may not be purchased with the assets of a Plan if the Seller, the
Master Servicer, the Indenture Trustee, the Owner Trustee or any of their
affiliates (i) has investment or administrative discretion with respect to such
Plan assets; (ii) has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan assets, for a fee and pursuant to an
agreement or understanding that such advice (a) will serve as a primary basis
for investment decisions with respect to such Plan assets and (b) will be based
on the particular investment needs for such Plan; or (iii) is an employer
maintaining or contributing to that Plan.
71
<PAGE> 73
THE CERTIFICATES
The Certificates may not be acquired by (i) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code (other than a
governmental plan described in Section 4975(g)(2) of the Code) or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity or which uses plan assets to acquire Certificates. By
its acceptance of a Certificate or a beneficial interest therein, each
Certificateholder or Certificate Owner will be deemed to have represented and
warranted that it is not subject to the foregoing limitation.
Due to the complexities of the foregoing rules and the penalties imposed
upon persons involved in prohibited transactions, it is important that the
fiduciary of an employee benefit plan considering the purchase of Certificates
consult with its counsel regarding the applicability of the prohibited
transaction provisions of ERISA and the Code to such investment.
Prohibited Transaction Class Exemption ("PTCE") 95-60 was issued by the
Department of Labor on July 12, 1995 in response to the United States Supreme
Court decision John Hancock Mutual Life Insurance Co. v. Harris Trust and
Savings Bank, 510 U.S. 86 (1993), in which the Court held that assets held in an
insurance company's general account may be deemed to be "plan assets" for ERISA
purposes under certain circumstances. Subject to certain conditions, PTCE 95-60
provides general relief from the prohibited transaction rules that would
otherwise be applicable to assets held in an insurance company's general
account. Prospective insurance company purchasers should consult with their
counsel to determine whether the decision in John Hancock, as modified by PTCE
95-60, affects their ability to make purchases of the Certificates.
UNDERWRITING
Subject to certain conditions contained in an underwriting agreement (the
"Underwriting Agreement"), Banc of America Securities LLC, Credit Suisse First
Boston Corporation and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Underwriters"), for whom Banc of America Securities LLC is acting as
representative (the "Representative"), have agreed to severally purchase from
the Trust, and the Trust has agreed to sell to the Underwriters, the respective
principal amounts of each Class of Notes and the Certificates as set forth
opposite their names below:
CLASS A-1, A-2 AND A-3 NOTES
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
UNDERWRITER OF CLASS A-1 NOTES OF CLASS A-2 NOTES OF CLASS A-3 NOTES
----------- ------------------ ------------------ ------------------
<S> <C> <C> <C>
Banc of America Securities LLC......... $ $ $
Credit Suisse First Boston
Corporation..........................
Donaldson, Lufkin & Jenrette
Securities Corporation...............
------------ ------------ -----------
Total........................ $224,100,000 $149,425,000 $73,975,000
============ ============ ===========
</TABLE>
72
<PAGE> 74
CERTIFICATES
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
UNDERWRITER OF CERTIFICATES
----------- ----------------
<S> <C>
Banc of America Securities LLC.............................. $
Credit Suisse First Boston Corporation......................
Donaldson, Lufkin & Jenrette Securities Corporation.........
-----------
Total............................................. $52,500,000
===========
</TABLE>
The Seller has been advised by the Representative that the Underwriters
propose initially to offer the Notes to the public at the respective public
offering prices set forth on the cover page of this Prospectus and to certain
dealers at those prices less a concession not in excess of % of the
principal amount of the Class A-1 Notes, % of the principal amount of the
Class A-2 Notes and % of the principal amount of the Class A-3 Notes. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of % of the principal amount of the Class A-1 Notes, % of the
principal amount of the Class A-2 Notes and % of the principal amount of
the Class A-3 Notes on sales to certain other dealers. After the initial public
offering, the public offering prices of the Notes and these concessions and
discounts may be changed.
The Seller has been advised by the Representative that the Underwriters
propose initially to offer the Certificates to the public at the public offering
price set forth on the cover page of this Prospectus and to certain dealers at
that price less a concession not in excess of % of the principal amount
thereof. The Underwriters may allow, and such dealers may reallow, a discount
not in excess of % of the principal amount of the Certificates. After the
initial public offering, the public offering price of the Certificates and that
concession and discount may be changed.
The Underwriting Agreement provides that the Underwriters' obligations
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions.
The Seller and WFS have agreed to jointly and severally indemnify the
Underwriters against certain liabilities, including liabilities under applicable
securities laws, or contribute to payments the Underwriters may be required to
make in respect thereof.
In connection with the offering of the Securities, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
any Class of Securities. Specifically, the Underwriters may overallot the
offering, creating a syndicate short position. The Underwriters may bid for and
purchase the Securities in the open market to cover syndicate short positions.
In addition, the Underwriters may bid for and purchase the Securities in the
open market to stabilize the price of the Securities. These activities may
stabilize or maintain the market price of the Securities above independent
market levels. The Underwriters are not required to engage in these activities,
and may end these activities at any time.
LEGAL MATTERS
Certain legal matters with respect to the Securities, including certain
federal and California income tax matters, will be passed upon for the Seller by
Mitchell, Silberberg & Knupp LLP, Los Angeles, California. Brown & Wood LLP, San
Francisco, California will act as counsel for the Underwriters. Certain legal
matters relating to the Policies will be passed upon for Financial Security by
Bruce E. Stern, Esq., General Counsel, Financial Security or an Associate
General Counsel of Financial Security and by Rogers & Wells LLP, New York, New
York.
73
<PAGE> 75
EXPERTS
The consolidated balance sheets of Financial Security Assurance Inc. and
Subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of income, changes in shareholder's equity and cash flows for each of
the three years in the period ended December 31, 1998, incorporated by reference
in this Prospectus, have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
FORWARD-LOOKING STATEMENTS
This Prospectus contains "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995 which provides a new "safe
harbor" for these types of statements. The forward-looking statements reflect
the Seller's current views with respect to future events and financial
performance and are subject to certain risks and uncertainties, including those
identified below, which could cause actual results to differ materially from
historical results or those anticipated. The forward-looking terminology such as
"believe," "expect," "may," "will," "should," "continue," and/or the negative
thereof or other comparable expressions which indicate future events and trends
identify forward-looking statements. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. The Seller undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. The level of demand for contracts, which is affected by
such external factors as the level of interest rates, the strength of the
various segments of the economy, debt burden held by consumers and demographics
of WFS' lending markets could cause actual results to differ materially from
historical results or those anticipated.
74
<PAGE> 76
INDEX OF DEFINITIONS
Set forth below is a list of the defined capitalized terms used in this
Prospectus and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Administration Agreement.................................... 47
Administration Fee.......................................... 48
Administrator............................................... 47
Advance..................................................... 55
Aggregate Scheduled Balance................................. 33
Aggregate Scheduled Balance Decline......................... 33
APR......................................................... 13
Bank........................................................ 63
Business Day................................................ 51
Calculation Day............................................. 37
Cede........................................................ 27
Certificate Balance......................................... 26
Certificate Distributable Amount............................ 33
Certificate Distribution Account............................ 31
Certificate Final Distribution Date......................... 26
Certificateholders.......................................... 27
Certificate Interest Carryover Shortfall.................... 33
Certificate Interest Distributable Amount................... 33
Certificate Percentage...................................... 34
Certificate Policy.......................................... 11
Certificate Pool Factor..................................... 21
Certificate Principal Carryover Shortfall................... 33
Certificate Principal Distributable Amount.................. 33
Certificate Quarterly Interest Distributable Amount......... 34
Certificate Quarterly Principal Distributable Amount........ 34
Certificates................................................ 5
Charge-Off Percentage....................................... 37
Class A-1 Final Distribution Date........................... 1
Class A-1 Notes............................................. 1
Class A-2 Final Distribution Date........................... 1
Class A-2 Notes............................................. 1
Class A-3 Final Distribution Date........................... 1
Class A-3 Notes............................................. 1
Closing Date................................................ 11
Code........................................................ 64
Collection Account.......................................... 31
Contracts................................................... 17
Cut-Off Date................................................ 11
Cut-Off Date Aggregate Scheduled Balance.................... 13
Defaulted Contract.......................................... 34
Delinquency Percentage...................................... 37
Determination Date.......................................... 32
Distribution Accounts....................................... 31
Distribution Dates.......................................... 6
Distribution Date Statement................................. 32
DTC......................................................... 27
</TABLE>
A-1
<PAGE> 77
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
DTC Services................................................ 29
Due Date.................................................... 36
Due Period.................................................. 34
Eligible Investments........................................ 31
ERISA....................................................... 9
Event of Default............................................ 23
Excess Amounts.............................................. 33
Exchange Act................................................ 27
FDIC........................................................ 63
Final Distribution Dates.................................... 6, 26
Financed Vehicles........................................... 11
Financial Security.......................................... 5
Guaranteed Distributions.................................... 50
Holding Account............................................. 31
Holdings.................................................... 52
Indenture................................................... 21
Indenture Trustee........................................... 5
Indirect Participants....................................... 27
Insolvency Event............................................ 41
Insurance Agreement......................................... 49
Insurer Default............................................. 24
Interest Period............................................. 22
Interest Rate............................................... 1
Issuer...................................................... 5
IRS......................................................... 64
Liquidated Contract......................................... 34
Liquidation Expenses........................................ 30
Master Servicer............................................. 5
Monthly P&I................................................. 36
Moody's..................................................... 6
Net Collections............................................. 30
Net Insurance Proceeds...................................... 30
Net Liquidation Proceeds.................................... 30
New Partnership............................................. 68
Nonrecoverable Advance...................................... 55
Note Distributable Amount................................... 35
Note Distribution Account................................... 31
Note Final Distribution Dates............................... 23
Note Interest Carryover Shortfall........................... 35
Note Interest Distributable Amount.......................... 35
Note Percentage............................................. 35
Note Policy................................................. 11
Note Pool Factor............................................ 21
Note Principal Carryover Shortfall.......................... 35
Note Principal Distributable Amount......................... 35
Note Quarterly Interest Distributable Amount................ 35
Note Quarterly Principal Distributable Amount............... 35
Noteholders................................................. 27
Notes....................................................... 5
Obligors.................................................... 12
</TABLE>
A-2
<PAGE> 78
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
OID......................................................... 65
Old Partnership............................................. 68
Omnibus Proxy............................................... 28
Optional Purchase........................................... 23
Order....................................................... 50
Original Certificate Balance................................ 26
OTS......................................................... 57
Owner Trustee............................................... 5
Participants................................................ 27
Pass-Through Rate........................................... 25
Paying Agent................................................ 27
Plans....................................................... 71
Policies.................................................... 11
Principal Distributable Amount.............................. 36
PTCE........................................................ 72
Rating Agencies............................................. 6
Record Date................................................. 22
Rees-Levering Act........................................... 60
Receipt..................................................... 51
Received.................................................... 51
Reinvestment Contract....................................... 31
Rule of 78's Contract..............A Contract that provides
for the payment by the Obligor of a specified total
number of payments, payable in equal monthly
installments, which total represents the principal
amount financed plus add-on interest in an amount
calculated by using the Rule of 78's. Under the Rule of
78's, the amount of a monthly payment allocable to
interest on a Contract is determined by multiplying the
total amount of add-on interest payable over the term
of the Contract by a fraction the denominator of which
is a number equal to the sum of a series of numbers
representing the number of each monthly payment due
under the Contract and the numerator of which for a
given month is the number of payments remaining before
the maturity of the Contract. For example, with a
Contract providing for 12 payments, the denominator of
each month's fraction will be 78, the sum of a series
of numbers from 1 to 12. Accordingly, in the example of
a twelve payment Contract, the fraction for the first
payment is 12/78, for the second payment 11/78, for the
third payment 10/78, and so on through the final
payment, for which the fraction is 1/78. The applicable
fraction is then multiplied by the total add-on
interest payment over the entire term of the Contract,
and the resulting amount is the amount of add-on
interest earned that month. The difference between the
amount of the monthly payment by the Obligor and the
amount of earned add-on interest calculated for the
month is applied to principal reduction. Under the law
of Texas, a similar procedure is permitted for
calculating the amount of add-on interest earned,
except the fraction is derived by using the sum of the
monthly payments rather than the sum of the number of
months (the "sum of the balances"). As a Contract using
either the Rule of 78's or the sum of the balances
method to compute interest earned is payable in equal
monthly payments, the mathematical result is
substantially identical under either system.
Accordingly, for purposes of convenience, the term
"Rule of 78's" is used herein in referring to Contracts
with add-on interest regardless of which system is used
to calculated interest earned.
Sale and Servicing Agreement................................ 12
Scheduled Balance........................................... 36
Scheduled Payments.......................................... 49
Securities.................................................. 5
Securityholders............................................. 11
</TABLE>
A-3
<PAGE> 79
<TABLE>
<CAPTION>
TERM PAGE
---- ----
<S> <C>
Seller...................................................... 5
Servicer Defaults........................................... 40
Servicing Fee............................................... 56
Servicing Fee Percent....................................... 56
Simple Interest Contract .. A Contract as to which interest
is calculated each day on the basis of the actual
principal balance of such Contract on such day
Specified Spread Account Balance............................ 37
Spread Account.............................................. 7, 36
Spread Account Initial Deposit.............................. 7, 36
Standard & Poor's........................................... 6
Statement to Securityholders................................ 38
Subservicer................................................. 54
Systems..................................................... 28
Trust....................................................... 5
Trust Agreement............................................. 11
Trust Fees and Expenses..................................... 22
Trust Property.............................................. 5
Trustees.................................................... 46
Trust Insolvency............................................ 24
UCC......................................................... 58
Underwriters................................................ 72
Underwriting Agreement...................................... 72
Unreimbursed Insurer Amounts................................ 33
Westcorp Financial.......................................... 62
WFAL........................................................ 5
WFS......................................................... 5
WII......................................................... 8
Year 2000 Problems.......................................... 29
</TABLE>
A-4
<PAGE> 80
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$500,000,000
WFS FINANCIAL 1999-C OWNER TRUST
$224,100,000
% AUTO RECEIVABLE BACKED NOTES, CLASS A-1
$149,425,000
% AUTO RECEIVABLE BACKED NOTES, CLASS A-2
$73,975,000
% AUTO RECEIVABLE BACKED NOTES, CLASS A-3
$52,500,000
% AUTO RECEIVABLE BACKED CERTIFICATES
WFS FINANCIAL AUTO LOANS, INC.
SELLER
WFS FINANCIAL INC
MASTER SERVICER
---------------------
PROSPECTUS
OCTOBER , 1999
---------------------
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information.
We are not offering the notes or certificates in any state where the offer
of such securities is not permitted.
We do not claim the accuracy of the information in this prospectus as of
any date other than the date stated on the cover of this prospectus.
Until , 2000, all dealers that buy, sell or trade the
Securities may be required to deliver a prospectus, regardless of whether they
are participating in the offer. This is in addition to the obligation of dealers
to deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 81
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Securities being registered
hereby are estimated as follows:
<TABLE>
<S> <C>
Registration Fee......................................... $139,000.00
Printing and Engraving................................... 26,250.00
Trustees' Fees........................................... 6,550.00
Accounting Fees.......................................... 13,400.00
Legal Fees and Expenses.................................. 42,000.00
Blue Sky Fees and Expenses............................... 10,500.00
Rating Agency Fees....................................... 31,500.00
Miscellaneous Fees....................................... 5,800.00
-----------
Total.......................................... $275,000.00
===========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 317(b) of the California Corporations Code (the "Corporations
Code") provides that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any "proceeding" (as defined in
Section 317(a) of the Corporations Code), other than an action by or in the
right of the corporation to procure a judgment in its favor, by reason of the
fact that such person is or was a director, officer, employee or other agent of
the corporation (collectively, an "Agent"), against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with such proceeding if the Agent acted in good faith and in a manner the Agent
reasonably believed to be in the best interest of the corporation and, in the
case of a criminal proceeding, had no reasonable cause to believe the conduct
was unlawful.
Section 317(c) of the Corporations Code provides that a corporation shall
have power to indemnify any Agent who was or is a party or is threatened to be
made a party to any threatened, pending or completed action by or in the right
of the corporation to procure a judgment in its favor by reason of the fact that
such person is or was an Agent, against expenses actually and reasonably
incurred by the Agent in connection with the defense or settlement of such
action if the Agent acted in good faith and in a manner such Agent believed to
be in the best interest of the corporation and its shareholders.
Section 317(c) further provides that no indemnification may be made
thereunder for any of the following: (i) in respect of any matter as to which an
Agent shall have been adjudged to be liable to the corporation, unless the court
in which such proceeding is or was pending shall determine that such Agent is
fairly and reasonably entitled to indemnity for expenses, (ii) of amounts paid
in settling or otherwise disposing of a pending action without court approval
and (iii) of expenses incurred in defending a pending action which is settled or
otherwise disposed of without court approval.
Section 317(d) of the Corporations Code requires that an Agent be
indemnified against expenses actually and reasonably incurred to the extent the
Agent has been successful on the merits in the defense of proceedings referred
to in subdivisions (b) or (c) of Section 317.
Except as provided in Section 317(d), and pursuant to Section 317(e),
indemnification under Section 317 shall be made by the corporation only if
specifically authorized and upon a
II-1
<PAGE> 82
determination that indemnification is proper in the circumstances because the
Agent has met the applicable standard of conduct, by any of the following: (i) a
majority vote of a quorum consisting of directors who are not parties to the
proceeding, (ii) if such a quorum of directors is not obtainable, by independent
legal counsel in a written opinion, (iii) approval of the shareholders, provided
that any shares owned by the Agent may not vote thereon, or (iv) the court in
which such proceeding is or was pending.
Pursuant to Section 317(f) of the Corporations Code, the corporation may
advance expenses incurred in defending any proceeding upon receipt of an
undertaking by the Agent to repay such amount if it is ultimately determined
that the Agent is not entitled to be indemnified.
Section 317(h) provides, with certain exceptions, that no indemnification
shall be made under Section 317 where it appears that it would be inconsistent
with a provision of the corporation's articles, bylaws, a shareholder resolution
or an agreement which prohibits or otherwise limits indemnification, or where it
would be inconsistent with any condition expressly imposed by a court in
approving a settlement.
Section 317(i) authorizes a corporation to purchase and maintain insurance
on behalf of an Agent for liabilities arising by reason of the Agent's status,
whether or not the corporation would have the power to indemnify the Agent
against such liability under the provisions of Section 317.
Registrant's Bylaws (the "Bylaws") provide for the indemnification of
officers and directors of the Registrant, to the maximum extent permitted by the
Corporations Code, against expenses, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding
arising by reason of the fact that such person is or was an officer or director
of the Registrant, and further provides for the advance to such officer or
director of expenses incurred by such officer or director in any such proceeding
to the maximum extent permitted by law. The Bylaws also provide that
Registrant's Board of Directors may provide for the indemnification of, or
advancement of expenses to, other Agents. Registrant's Articles of Incorporation
provide that the liability of directors of the Registrant shall be eliminated to
the fullest extent permissible under California law, but contain no specific
provisions with respect to the indemnification of, or advancement of expenses
to, Agents.
Reference is also made to Section 7 of the Underwriting Agreement among
Banc of America Securities LLC as representative of the several underwriters,
the Registrant and WFS (see Exhibit 1.1), which provides for indemnification of
the Registrant under certain circumstances.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a. EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement
3.1 Articles of Incorporation of WFS Financial Auto Loans, Inc.*
3.2 Bylaws of WFS Financial Auto Loans, Inc.*
4.1 Form of Trust Agreement among WFS Financial Auto Loans,
Inc., as Seller, WFS Investments, Inc., Financial Security
Assurance Inc. and Chase Manhattan Bank Delaware, as Owner
Trustee (including form of Certificates)
</TABLE>
II-2
<PAGE> 83
<TABLE>
<C> <S>
4.2 Form of Indenture among WFS Financial 1999-C Owner Trust,
Financial Security Assurance Inc. and Bankers Trust Company,
as Indenture Trustee (including forms of Notes)
5.1 Opinion of Mitchell, Silberberg & Knupp LLP with respect to
legality
8.1 Opinion of Mitchell, Silberberg & Knupp LLP with respect to
tax matters
10.1 Form of Reinvestment Contract*
10.2 Form of Sale and Servicing Agreement
10.3 Form of Insurance Agreement*
10.4 Form of Financial Guaranty Insurance Policy (Notes)*
10.5 Form of Financial Guaranty Insurance Policy (Certificates)*
10.6 Form of Indemnification Agreement*
10.7 Form of Administration Agreement among WFS Financial 1999-B
Owner Trust, WFS Financial Inc, and Bankers Trust Company,
as Indenture Trustee*
20.1 Consolidated financial statements of Financial Security
Assurance Inc. and Subsidiaries as of December 31, 1998 and
1997, and for each of the three years in the period ended
December 31, 1998 (Incorporated by reference from the Annual
Report on Form 10-K of Financial Security Assurance Holdings
Inc. for the year ended December 31, 1998 (file #1-12644) as
filed on or about March 25, 1999)*
20.2 Condensed consolidated financial statements of Financial
Security Assurance Inc. and Subsidiaries for the three month
period ended March 31, 1999 (Incorporated by reference from
the Quarterly Report on Form 10-Q of Financial Security
Assurance Holdings Inc. for the quarter ended March 31, 1999
(file #1-12644) as filed on or about May 14, 1999)*
20.3 Condensed consolidated financial statements of Financial
Security Assurance Inc. and Subsidiaries for the six month
period ended June 30, 1999 (Incorporated by reference from
the Quarterly Report on Form 10-Q of Financial Security
Assurance Holdings Inc. for the quarter ended June 30, 1999
(file # 1-12644) as filed on or about August 14, 1999)*
23.1 Consent of Mitchell, Silberberg & Knupp LLP (included as
part of Exhibit 5.1)
23.2 Consent of Mitchell, Silberberg & Knupp LLP (included as
part of Exhibit 8.1)
23.3 Consent of PricewaterhouseCoopers L.L.P.
24.1 Power of Attorney*
25.1 Statement of Eligibility and Qualification of Indenture
Trustee
</TABLE>
- ---------------
* Previously filed.
b. FINANCIAL STATEMENT SCHEDULES
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes as follows:
(a) To provide to the Underwriters at the Closing Date specified in
the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to provide prompt
delivery to each purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of such Registrant in the
successful
II-3
<PAGE> 84
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(c) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act will be deemed to be part of this registration
statement as of the time it was declared effective.
(d) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed to
be the initial bona fide offering thereof.
II-4
<PAGE> 85
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that (i) it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and (ii) it reasonably believes
that the securities offered under this Registration Statement will be
"investment grade securities", as such term is defined under Transaction
Requirements B.2 of the Instructions to Form S-3, at the time of sale of such
securities, and has duly caused Amendment No. 1 to this Registration Statement
on Form S-3 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on the 22nd day of
October, 1999.
WFS FINANCIAL AUTO LOANS, INC.,
as originator of
WFS FINANCIAL 1999-C OWNER
TRUST
By: /s/ THOMAS A. WOLFE
--------------------------------------
Thomas A. Wolfe
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
Amendment No. 1 to this Registration Statement on Form S-3 has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ THOMAS A. WOLFE President and Chief Executive October 22, 1999
- --------------------------------------- Officer, Director (Principal
Thomas A. Wolfe Executive Officer)
* Chief Financial Officer, Director October 22, 1999
- --------------------------------------- (Principal Financial and Accounting
Lee A. Whatcott Officer)
* Director October 22, 1999
- ---------------------------------------
Joy Schaefer
* Director October 22, 1999
- ---------------------------------------
James R. May
* Director October 22, 1999
- ---------------------------------------
Jeffrey B. Davis
By: /s/ THOMAS A. WOLFE
----------------------------------
Thomas A. Wolfe
Attorney In Fact
</TABLE>
II-5
<PAGE> 86
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement..............................
3.1 Articles of Incorporation of WFS Financial Auto Loans,
Inc.*.......................................................
3.2 Bylaws of WFS Financial Auto Loans, Inc.*...................
4.1 Form of Trust Agreement among WFS Financial Auto Loans,
Inc., as Seller, WFS Investments, Inc., Financial Security
Assurance Inc. and Chase Manhattan Bank Delaware, as Owner
Trustee (including form of Certificates)....................
4.2 Form of Indenture among WFS Financial 1999-C Owner Trust,
Financial Security Assurance Inc. and Bankers Trust Company,
as Indenture Trustee (including forms of Notes).............
5.1 Opinion of Mitchell, Silberberg & Knupp LLP with respect to
legality....................................................
8.1 Opinion of Mitchell, Silberberg & Knupp LLP with respect to
tax matters.................................................
10.1 Form of Reinvestment Contract*..............................
10.2 Form of Sale and Servicing Agreement........................
10.3 Form of Insurance Agreement*................................
10.4 Form of Financial Guaranty Insurance Policy (Notes)*........
10.5 Form of Financial Guaranty Insurance Policy
(Certificates)*.............................................
10.6 Form of Indemnification Agreement*..........................
10.7 Form of Administration Agreement among WFS Financial 1999-A
Owner Trust, WFS Financial Inc, and Bankers Trust Company,
as Indenture Trustee*.......................................
20.1 Consolidated financial statements of Financial Security
Assurance Inc. and Subsidiaries as of December 31, 1998 and
1997, and for each of the three years in the period ended
December 31, 1998 (Incorporated by reference from the Annual
Report on Form 10-K of Financial Security Assurance Holdings
Inc. for the year ended December 31, 1998 (file #1-12644) as
filed on or about March 25, 1999)*..........................
20.2 Condensed consolidated financial statements of Financial
Security Assurance Inc. and Subsidiaries for the three month
period ended March 31, 1999 (Incorporated by reference from
the Quarterly Report on Form 10-Q of Financial Security
Assurance Holdings Inc. for the quarter ended March 31, 1999
(file #1-12644) as filed on or about May 14, 1999)*.........
20.3 Condensed consolidated financial statements of Financial
Security Assurance Inc. and Subsidiaries for the six month
period ended June 30, 1999 (Incorporated by reference from
the Quarterly Report on Form 10-Q of Financial Security
Assurance Holdings Inc. for the quarter ended June 30, 1999
(file # 1-12644) as filed on or about August 14, 1999)*.....
23.1 Consent of Mitchell, Silberberg & Knupp LLP (included as
part of Exhibit 5.1)........................................
23.2 Consent of Mitchell, Silberberg & Knupp LLP (included as
part of Exhibit 8.1)........................................
23.3 Consent of PricewaterhouseCoopers LLP.......................
24.1 Power of Attorney*..........................................
25.1 Statement of Eligibility and Qualification of Indenture
Trustee.....................................................
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 1.1
WFS FINANCIAL 1999-C OWNER TRUST
$224,100,000
______ % AUTO RECEIVABLE BACKED NOTES, CLASS A-1
$149,425,000
______ % AUTO RECEIVABLE BACKED NOTES, CLASS A-2
$73,975,000
______ % AUTO RECEIVABLE BACKED NOTES, CLASS A-3
$52,500,000
______ % AUTO RECEIVABLE BACKED CERTIFICATES
WFS FINANCIAL AUTO LOANS, INC., SELLER
WFS FINANCIAL INC, MASTER SERVICER
UNDERWRITING AGREEMENT
October __, 1999
Banc of America Securities LLC
as Representative of the several Underwriters
100 North Tyron Street
Charlotte, North Carolina 28255
Dear Sirs:
WFS Financial Auto Loans, Inc., a California corporation (the
"Company"), proposes to sell to the several underwriters listed on Schedule I
hereto (the "Underwriters") for whom Banc of America Securities LLC will be
acting as representative (the "Representative"), as provided in Section 2 hereof
$224,100,000 aggregate principal amount of ______% Auto Receivable Backed Notes,
Class A-1 (the "Class A-1 Notes"), $149,425,000 aggregate principal amount of
______% Auto Receivable Backed Notes, Class A-2 (the "Class A-2 Notes"),
$73,975,000 aggregate principal amount of ______% Auto Receivable Backed Notes,
Class A-3 (the "Class A-3 Notes" and, together with the Class A-1 Notes and the
Class A-2 Notes, the "Notes") and $52,500,000 aggregate principal amount of
______% Auto Receivable Backed Certificates (the "Certificates" and, together
with the Notes, the "Securities"). The Notes will be issued pursuant to an
indenture dated as of October 1, 1999 (the "Indenture"), between the WFS
Financial 1999-C Owner Trust (the "Trust") and Bankers Trust Company, as trustee
(the "Indenture Trustee"). Each Note will represent an obligation of the Trust.
The Trust will be created and the Certificates will be issued
<PAGE> 2
pursuant to a trust agreement, dated as of October __, 1999, as amended and
restated as of November 3, 1999 (the "Trust Agreement"), among the Company, WFS
Investments, Inc. ("WII"), Financial Security Assurance Inc. ("Financial
Security") and Chase Manhattan Bank Delaware, as Owner Trustee. Each Certificate
will evidence a fractional undivided interest in the Trust. Financial Security
will issue a financial guaranty insurance policy for the exclusive benefit of
the Notes (the "Note Policy") and a financial guaranty insurance policy for the
exclusive benefit of the Certificates (the "Certificate Policy" and, together
with the Note Policy, the "Policies").
The assets of the Trust will include, among other things, (i) a pool of
retail installment sales contracts and installment loans (the "Contracts")
secured by new and used automobiles and light-duty trucks financed thereby (the
"Financed Vehicles"), (ii) certain monies due under the Contracts on and after
November 1, 1999, (iii) security interests in the Financed Vehicles, (iv) the
Policies, (v) amounts on deposit in certain accounts and (vi) certain rights
under the sale and servicing agreement dated as of October 1, 1999 (the "Sale
and Servicing Agreement"), among the Trust, the Company and WFS Financial Inc
("WFS"), as Master Servicer. Pursuant to the Indenture, the Trust property will
be held by the Indenture Trustee on behalf of the holders of the Notes. Pursuant
to the administration agreement dated as of October 1, 1999 (the "Administration
Agreement"), among the Company, WII, WFS, as administrator (in such capacity,
the "Administrator"), the Trust and the Indenture Trustee, the Administrator
will perform certain administrative obligations under the Indenture. Capitalized
terms used herein that are not otherwise defined shall have the meanings
ascribed thereto in the Indenture or the Sale and Servicing Agreement, as the
case may be. The Securities are more fully described in a Registration Statement
(as such term is defined in Section 1 hereof) which the Company has furnished to
the Underwriters.
1. Registration Statement and Prospectuses. The Company has prepared
and filed with the Securities and Exchange Commission (the "Commission") in
accordance with the provisions of the Securities Act of 1933, as amended (the
"Act"), a registration statement on Form S-3 (File No. _________), including a
form of prospectus, relating to the Securities. Such registration statement has
been declared effective by the Commission. If any post-effective amendment has
been filed with respect thereto, prior to the execution and delivery of this
Agreement, the most recent such amendment has been declared effective by the
Commission. Such registration statement, as amended and the prospectus
constituting a part thereof (including in each case the information deemed to be
a part thereof pursuant to Rule 430A under the Act and all documents, if any,
incorporated or deemed to be incorporated by reference therein pursuant to the
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act")), as
from time to time amended or supplemented pursuant to the Act or otherwise, are
hereinafter referred to as the "Registration Statement" and the "Prospectus",
respectively, except that if any revised prospectus shall be provided to the
Underwriters by the Company for use in connection with the offering of the
Securities which differs from the Prospectus on file at the Commission at the
time the Registration Statement became effective (whether or not such revised
prospectus is required to be filed by the Company pursuant to Rule 424(b) under
the Act ("Rule 424(b)") of the rules and regulations of the Commission
promulgated under the Act (the "Rules and Regulations"), the term "Prospectus"
shall refer to such revised prospectus from and after the time it is first
provided to the Underwriters for such use. All references in this Agreement to
financial statements and schedules and other information which is "contained,"
"included" or "stated" in
2
<PAGE> 3
the Registration Statement or the Prospectus (and all other references of like
import) shall be deemed to mean and include all such financial statements and
schedules and other information which are or are deemed to be incorporated by
reference in the Registration Statement or the Prospectus, as the case may be;
and all references in this Agreement to amendments or supplements to the
Registration Statement or the Prospectus shall be deemed to mean and include the
filing of any documents under the Exchange Act after the date of this Agreement
which are or are deemed to be incorporated by reference in the Registration
Statement or the Prospectus, as the case may be.
2. Agreements to Sell and Purchase. The Company agrees to sell to the
Underwriters, and upon the basis of the representations, warranties and
agreements of the Company and WFS herein contained and subject to all the terms
and conditions of this Agreement, the Underwriters agree to purchase from the
Company, severally and not jointly, on the Closing Date referred to in Section 4
hereof, the Securities at a purchase price of, in the case of (i) the Class A-1
Notes, ______% of the principal amount thereof; (ii) the Class A-2 Notes,
______% of the principal amount thereof; (iii) the Class A-3 Notes, ______% of
the principal amount thereof and (v) the Certificates, ______% of the principal
amount thereof, in each case plus accrued interest at the related Interest Rate
or the Pass-Through Rate, as the case may be, from November 1, 1999, to but not
including the Closing Date.
3. Terms of Public Offering. The Company is advised by the
Representative that the Underwriters propose (i) to make a public offering of
the Securities as soon after the execution of this Agreement as in the judgment
of the Representative is advisable and (ii) initially to offer each Class of
Notes and the Certificates upon the terms set forth in the Prospectus.
4. Delivery and Payment. Delivery of the Securities shall be made at
the office of the Representative at 100 North Tyron Street, Charlotte, North
Carolina 28255 on or about 10:00 A.M., Charlotte, North Carolina time, on
November __, 1999 (such time and date are referred to herein as the "Closing
Date"). Payment for the Securities shall be made at the offices of WFS Financial
Inc, 23 Pasteur Road, Irvine, California 92718. The Closing Date and the
location of the delivery of and payment for the Securities may be varied by
agreement between the Representative and the Company.
Each Class of Notes and the Certificates will be initially represented
by one or more certificates in definitive form registered in the name of Cede &
Co., the nominee of The Depository Trust Company ("DTC") (the "DTC
Certificates"). The certificates evidencing the DTC Certificates shall be made
available to the Representative for inspection not later than 10:00 A.M.,
Charlotte, North Carolina time, on the business day immediately preceding the
Closing Date. The Securities shall be delivered to the Underwriters on the
Closing Date for their respective accounts against payment of the purchase price
therefor by either (i) certified or official bank check or checks payable in New
York Clearing House (next day) funds to the order of the Company or (ii) wire
transfer (same day funds), as the Representative and the Company shall agree.
Pursuant to Rule 15c6-1(d) under the Exchange Act, the parties hereto
have agreed that the Closing Date will be not later than November __, 1999.
3
<PAGE> 4
5. Agreements of the Company. The Company agrees with the Underwriters:
(a) To transmit the Prospectus to the Commission pursuant to
Rule 424(b) by a means reasonably calculated to result in the timely
filing of such Prospectus with the Commission pursuant to Rule 424(b).
(b) To advise the Representative promptly and, if requested by
the Representative, to confirm such advice in writing, (i) when the
Registration Statement has become effective and when any post-effective
amendment to it becomes effective, (ii) of any request by the
Commission for amendments to the Registration Statement or amendments
or supplements to the Prospectus or for additional information, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of any of the Securities for offering or sale in any
jurisdiction, or the initiation of any proceeding for either such
purpose, and (iv) of the happening of any event during the period
referred to in paragraph (e) below which, in the judgment of the
Company, makes the Registration Statement or the Prospectus contain an
untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading. If at any time the Commission shall issue any
stop order suspending the effectiveness of the Registration Statement,
the Company will make every reasonable effort to obtain the withdrawal
or lifting of such order at the earliest possible time.
(c) To furnish to the Representative two signed copies of the
Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits, and to furnish to the
Underwriters such number of conformed copies of the Registration
Statement as so filed and of each amendment to it, without exhibits, as
the Underwriters may reasonably request.
(d) Not to file any amendment or supplement to the
Registration Statement, whether before or after the time when it
becomes effective, or to make any amendment or supplement to the
Prospectus of which the Representative shall not previously have been
advised or to which the Representative shall reasonably object and to
prepare and file with the Commission promptly upon the request of the
Representative, any amendment to the Registration Statement or
supplement to the Prospectus which may be necessary or advisable in
connection with the distribution of any of the Securities by the
Underwriters, and to use its best efforts to cause the same to become
promptly effective.
(e) Promptly after the Registration Statement becomes
effective, and from time to time thereafter for such period as in the
opinion of counsel to the Underwriters a prospectus is required by law
to be delivered in connection with sales by the Underwriters or such
dealers as the Representative shall specify, to furnish to the
Underwriters and each such dealer as many copies of the Prospectus (and
of each amendment or supplement to the Prospectus) as the Underwriters
or such dealer may reasonably request.
(f) If during the period specified in Section 5(e) hereof any
event shall occur as a result of which, in the opinion of the Company
or counsel to the Underwriters it
4
<PAGE> 5
becomes necessary to amend or supplement the Prospectus in order to
make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any law,
forthwith to prepare and file with the Commission an appropriate
amendment or supplement to the Prospectus so that the statements in the
Prospectus, as so amended or supplemented, will not, in the light of
the circumstances when it is so delivered, be misleading, or so that
the Prospectus will comply with law, and to furnish to the Underwriters
and to such dealers as the Representative shall specify, such number of
copies thereof as the Underwriters or such dealers may reasonably
request.
(g) Prior to any public offering of the Securities, to
cooperate with the Underwriters and counsel to the Underwriters in
connection with the registration or qualification of the Securities for
offer and sale by the Underwriters and by dealers under the securities
or Blue Sky laws of such jurisdictions as the Underwriters may
reasonably request, to continue such qualification in effect so long as
reasonably required for distribution of the Securities and to file such
consents to service of process or other documents as may be necessary
in order to effect such registration or qualification; provided that
the Company shall not be required to register or qualify as a foreign
corporation or to take any action which would subject it to service of
process in suits, other than as to matters and transactions relating to
the offer and sale of the Securities, in any jurisdiction where it is
not now so subject.
(h) As soon as practicable, but not later than 16 months after
the "effective date" of the Registration Statement, to cause the Trust
to make generally available to holders of the Securities an earnings
statement of the Trust covering a 12 month period beginning not later
than the first day of the Trust's fiscal quarter next following the
"effective date" of the Registration Statement. Such statement shall
satisfy the provisions of Section 11(a) of the Act.
(i) So long as any of the Securities remain outstanding,
promptly to furnish to the Underwriters (i) the annual statements of
compliance, annual independent certified public accountants' reports
and annual opinions of counsel furnished to the Indenture Trustee or
the Owner Trustee pursuant to the Sale and Servicing Agreement, the
Indenture and the Trust Agreement, as soon as such statements, reports
and opinions are furnished to the Indenture Trustee or the Owner
Trustee, (ii) all documents of the Company or the Trust required to be
distributed to Securityholders or filed with the Commission pursuant to
the Exchange Act or any order of the Commission thereunder and (iii)
such other information concerning the Company, the Trust or WFS as the
Underwriters may reasonably request.
(j) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date and to satisfy all conditions
precedent to the delivery of the Securities. To the extent, if any,
that the ratings provided with respect to the Securities by any Rating
Agency (as such term is defined in Section 8(m) hereof) that initially
rates the Securities is conditional upon the furnishing of documents or
the taking of any other actions by the Company, the Company shall
furnish such documents and take such other actions.
5
<PAGE> 6
(k) If this Agreement shall be terminated pursuant to any of
the provisions hereof (otherwise than by notice given by the
Representative pursuant to Section 10 hereof) or if for any reason the
Company shall be unable to perform its obligations hereunder, to
reimburse the Underwriters for all of their out-of-pocket expenses
(including the fees and expenses of counsel to the Underwriters)
reasonably incurred by the Underwriters in connection herewith.
(l) To apply the net proceeds from the offering in the manner
set forth under the caption "Use of Proceeds" in the Prospectus.
(m) The Company, during the period when the Prospectus is
required to be delivered under the Act or the Exchange Act (including
the Rules and Regulations and the rules and regulations of the
Commission under the Exchange Act (the "Exchange Act Regulations")),
will file all documents required to be filed with the Commission
pursuant to Section 13, 14 or 15 of the Exchange Act within the time
periods required by the Exchange Act and the Exchange Act Regulations.
6. Representations and Warranties of the Company and WFS.
(a) The Company represents and warrants to the Underwriters that:
(i) The conditions to the use of a registration statement on
Form S-3 under the Act, as set forth in the General Instructions to
Form S-3, have been satisfied with respect to the Company and the
Registration Statement and the Prospectus fully comply, and any
supplements or amendments thereto will fully comply, in all material
respects with the provisions of the Act.
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of the Company,
threatened by the Commission. At the effective date, respectively, of
the Registration Statement and any post-effective amendments thereto,
at the date of this Agreement and the Closing Date, the Registration
Statement and any post-effective amendments or supplements thereto
complied or will comply in all respects with the requirements of the
Act and the Rules and Regulations, and did not and will not include any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading and on the date of filing the Prospectus
pursuant to Rule 424(b), the date of this Agreement and the Closing
Date, neither the Prospectus nor any amendments or supplements thereto
contained or will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, except that
the representations and warranties in this subparagraph shall not apply
to statements or omissions in the Registration Statement or the
Prospectus or any preliminary prospectus made in reliance upon
information furnished to the Company in writing by the Underwriters
through the Representative expressly for use therein or to that part of
the Registration Statement which shall constitute the Statement of
Eligibility and Qualification of the Indenture Trustee on
6
<PAGE> 7
Form T-1 (the "Form T-1") under the Trust Indenture Act of 1939, as
amended (the "1939 Act").
(iii) Each preliminary prospectus, the Prospectus and any
amendment or supplement thereto, complied or will comply when so filed
with the requirements of the Act and the Rules and Regulations, and the
Prospectus delivered to the Underwriters for use in connection with the
offering of the Securities was identical to the electronically
transmitted copies thereof filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system, except to the
extent permitted by Regulation S-T.
(iv) The documents incorporated or deemed to be incorporated
by reference in the Registration Statement and the Prospectus, at the
time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the
Exchange Act and Exchange Act Regulations, and, when read together with
the other information in the Prospectus, at the date of this Agreement
and at the Closing Date, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading.
(v) The Securities conform to the description thereof
contained in the Prospectus and are duly and validly authorized and (i)
when the Certificates have been executed, authenticated and delivered
in accordance with the Trust Agreement and delivered to and paid for by
the Underwriters as provided herein, will be entitled to the benefits
and security afforded by the Trust Agreement and will constitute legal,
valid and binding obligations of the Trust enforceable in accordance
with their terms and the terms of the Trust Agreement, and (ii) when
the Notes have been executed, authenticated and delivered in accordance
with the Indenture and delivered to and paid for by the Underwriters as
provided herein, will be entitled to the benefits and security afforded
by the Indenture and will constitute legal, valid and binding
obligations of the Trust enforceable in accordance with their terms and
the terms of the Indenture, in each case subject to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(vi) The execution and delivery by the Company of the
Administration Agreement, the Indenture, the Sale and Servicing
Agreement, the Trust Agreement, the indemnification agreement dated as
of November 1, 1999 (the "Indemnification Agreement"), among the
Company, WFS, Financial Security and the Representative, the insurance,
indemnity and pledge agreement dated as of November 1, 1999 (the
"Insurance Agreement" and, together with the Administration Agreement,
the Indemnification Agreement, the Indenture, the Sale and Servicing
Agreement and the Trust Agreement, the "Basic Documents"), among the
Trust, the Company, WFS, WII, Financial Security and the Indenture
Trustee, and this Agreement are within the corporate power of the
Company and have been duly authorized by all necessary corporate action
7
<PAGE> 8
on the part of the Company; and neither the issuance and sale of the
Securities to the Underwriters, nor the execution and delivery by the
Company of this Agreement and the Basic Documents to which it is a
party, nor the consummation by the Company of the transactions herein
and therein contemplated, nor compliance by the Company with the
provisions hereof or thereof, will conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under,
the articles of incorporation or bylaws of the Company or any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company is now a party or by which it is bound, or any order
of any court or government agency or authority entered in any
proceeding to which the Company was or is now a party or by which it is
bound.
(vii) The Company has been duly incorporated and is validly
existing in good standing under the laws of the State of California and
is duly qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction where the character
of its properties or the nature of its activities makes such
qualification necessary, except such jurisdictions, if any, in which
the failure to be so qualified will not have a material adverse effect
on either the business or properties of the Company; the Company holds
all material licenses, certificates and permits from all governmental
authorities necessary for the conduct of its business as described in
the Prospectus; and the Company has the corporate power and authority
to own its properties and conduct its business as described in the
Prospectus.
(viii) Each of this Agreement and the Basic Documents to which
the Company is a party, when executed and delivered as contemplated
thereby, will have been duly authorized, executed and delivered by the
Company and will constitute, when so executed and delivered, a legal,
valid and binding instrument enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium or other similar laws affecting
creditors' rights generally, subject to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity
or at law) and, in the case of this Agreement and the Indemnification
Agreement, except as rights to indemnity and contribution hereunder and
thereunder may be limited by applicable law; each of the Basic
Documents conforms to the description thereof contained in the
Prospectus; and the Indenture has been duly qualified under the 1939
Act.
(ix) At the Closing Date, the Company will have good and
marketable title to the Contracts listed in Schedule A to the Sale and
Servicing Agreement, free and clear of any lien, mortgage, pledge,
charge, security interest or other encumbrance (subject to the security
interest afforded to Financial Security under the Insurance Agreement);
and the Company's assignment and delivery of the Contract Documents to
the Trust will vest in the Trust the good and marketable title
purported to be conveyed thereby (subject to the security interest
afforded to Financial Security under the Insurance Agreement).
(x) The Trust's assignment of the Trust Estate to the
Indenture Trustee pursuant to the Indenture will vest in the Indenture
Trustee, for the benefit of the Noteholders, a first priority perfected
security interest therein, subject to no prior lien, mortgage, pledge,
charge, security interest or other encumbrance, except that such
8
<PAGE> 9
security interest will be subject to the security interest afforded to
Financial Security under the Insurance Agreement.
(xi) The representations and warranties made by the Company in
the Sale and Servicing Agreement and in the Officers' Certificates of
the Company delivered pursuant to the Basic Documents to which the
Company is a party will be true and correct at the Closing Date.
(xii) Since June 30, 1999, there has been no material adverse
change or development involving a prospective material adverse change
in or affecting particularly the condition, financial or otherwise, of
the Company, or the earnings, affairs or business prospects of the
Company, whether or not arising in the ordinary course of business,
except as set forth in or contemplated in the Prospectus.
(b) WFS represents and warrants to the Underwriters that the
representations and warranties of the Company set forth in paragraph (a) above
are true and correct, and to the further effect that:
(i) WFS has been duly incorporated and is validly existing in
good standing under the laws of the State of California and is duly
qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction where the character of its
properties or the nature of its activities makes such qualification
necessary, except such jurisdictions, if any, in which the failure to
be so qualified will not have a material adverse effect on either the
business or properties of WFS; WFS holds all material licenses,
certificates and permits from all governmental authorities necessary
for the conduct of its business as described in the Prospectus; and WFS
has the corporate power and authority to own its properties and conduct
its business as described in the Prospectus.
(ii) The execution and delivery by WFS of this Agreement and
the Basic Documents to which it is a party are within the corporate
power of WFS and have been duly authorized by all necessary action on
the part of WFS; and neither the execution and delivery by WFS of this
Agreement and the Basic Documents to which it is a party, nor the
consummation by WFS of the transactions herein and therein
contemplated, nor compliance by WFS with the provisions hereof and
thereof, will conflict with or result in a breach of any of the terms
or provisions of, or constitute a default under, the articles of
incorporation or bylaws of WFS or any indenture, mortgage, deed of
trust or other agreement or instrument to which WFS is now a party or
by which it is bound, or any order of any court or government agency or
authority entered in any proceeding to which WFS was or is now a party
or by which it is bound.
(iii) Each of this Agreement and each Basic Document to which
WFS is a party has been duly authorized, executed and delivered by WFS
and constitutes a valid and binding agreement of WFS, enforceable
against WFS in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium or other similar
laws affecting creditors' rights generally, subject to general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law) and, in
9
<PAGE> 10
the case of this Agreement and the Indemnification Agreement, except as
rights to indemnity and contribution hereunder and thereunder may be
limited by applicable law.
(iv) The Contracts transferred to the Company from WFS on the
Closing Date were free and clear of all liens (including tax liens),
mortgages, pledges, charges, security interests and other encumbrances
at the time of such transfer (subject to the security interest afforded
to Financial Security under the Insurance Agreement).
(v) WFS has the power and authority to own its properties, to
conduct its business as described in the Prospectus and to enter into
and perform its obligations under each of the Basic Documents to which
it is a party.
(vi) Since June 20, 1999, there has been no material adverse
change or development involving a prospective material adverse change
in or affecting particularly the condition, financial or otherwise, of
WFS, or the earnings, affairs or business prospects of WFS, whether or
not arising in the ordinary course of business, except as set forth in
or contemplated in the Prospectus.
7. Payment of Expenses. The Company will pay all costs, expenses, fees
and taxes incident to the performance of its obligations under this Agreement,
including (i) the preparation, printing, filing and distribution under the Act
of the Registration Statement as first filed (including all financial
statements, exhibits and documents incorporated by reference), each preliminary
prospectus and all amendments and supplements to any of them (including the
delivery to the Underwriters of copies thereof), (ii) the preparation of this
Agreement, (iii) the preparation, issuance and delivery of the Securities to the
Underwriters, (iv) the fees and disbursements to the Company's counsel and
accountants, (v) the registration or qualification of the Securities for offer
and sale under the securities or Blue Sky laws of the jurisdictions referenced
in Section 5(g) hereof (including in each case the filing fees and the fees and
disbursements of counsel to the Underwriters relating to such registration or
qualification and in connection with the preparation of any Blue Sky or legal
investment survey relating thereto), (vi) the printing or copying and delivery
to the Underwriters of any dealer agreement, Preliminary and Supplemental Blue
Sky Memoranda, legal investment memoranda and all other agreements, memoranda,
correspondence and other documents printed and delivered in connection with the
offering of the Securities (including in each case the disbursements of counsel
to the Underwriters relating to such reproducing and delivery), (vii) any fees
paid to Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's, a
division of The McGraw-Hill Companies, Inc. ("Standard & Poor's") in connection
with the rating of the Securities.
8. Indemnification and Contribution.
(a) The Company and WFS jointly and severally agree to indemnify and
hold harmless each Underwriter from and against any and all losses, claims,
damages, liabilities and judgments, joint or several, to which such Underwriter
may become subject under the Act or the Exchange Act or otherwise, insofar as
such losses, claims, damages, liabilities or judgments (or actions in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
preliminary Prospectus, the Preliminary Prospectus Supplement (if any), the
Prospectus or any amendment or supplement
10
<PAGE> 11
thereto or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and the Company and WFS will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability,
judgment or action as such expenses are incurred; provided, however, that
neither the Company nor WFS will be liable in any such case to the extent that
any such loss, claim, damage, liability or judgment arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any such document in reliance upon and in conformity with written
information furnished to the Company by the Underwriters through the
Representative specifically for use therein.
(b) Each Underwriter, severally but not jointly, agrees to indemnify
and hold harmless the Company and WFS from and against any and all losses,
claims, damages, liabilities and judgments, joint or several, to which the
Company and WFS may become subject under the Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages, liabilities or judgments (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, the preliminary prospectus, the Prospectus or any
amendment or supplement thereto or (ii) any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information relating to such Underwriter furnished to the Company or WFS by such
Underwriter through the Representative specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Company or WFS
in connection with investigating or defending any such loss, claim, damage,
liability, judgment or action as such expenses are incurred, it being understood
that the only such information furnished by any Underwriter consists of the
following information in the Prospectus furnished on behalf of each Underwriter:
the concession and reallowance figures appearing in the second and third
paragraphs under the caption "Underwriting" and the information regarding price
stabilization contained in the sixth paragraph under the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
Section 8(a) or 8(b), notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve such indemnifying party from any liability that it may have to any
indemnified party otherwise than under Section 8(a) or 8(b). In case any such
action is brought against any indemnified party and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election to so assume the defense thereof and approval by the indemnified party
of the counsel appointed by the indemnifying party, the indemnifying party will
not be liable to such indemnified party under this Section for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation. The
indemnifying party shall not be liable for any
11
<PAGE> 12
settlement of any such action effected without the written consent of the
indemnifying party but, if settled with the written consent of the indemnifying
party, the indemnifying party agrees that each person so consenting agrees to
indemnify and hold harmless each such indemnified party from and against any
loss or liability by reason of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments referred to in subsection (a) or (b) above: (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company and WFS on the one hand and such Underwriter(s) on the other from
the offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and WFS on the one hand and such
Underwriter(s) on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or judgments, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and WFS on the one hand and such Underwriter(s) on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Securities (before deducting expenses) received by the Company
and WFS and the total underwriting discounts and commissions received by such
Underwriter(s), bear to the total price to the public of the Securities, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of the Company, WFS and the relevant Underwriter(s) shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, WFS or the relevant
Underwriter(s) and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, WFS and the Underwriters agree that it would not be just
and equitable if contribution pursuant to Section 8(d) were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section, no Underwriter (except as may be
provided in the agreement among underwriters relating to the offering of the
Securities) shall be required to contribute any amount in excess of the
underwriting discount or commission applicable to the Securities purchased by
such Underwriter hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
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<PAGE> 13
(e) The obligations of the Company and WFS under this Section shall be
in addition to any liability the Company or WFS may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any of the Underwriters within the meaning of the Act; and the obligations of
the Underwriters under this Section shall be in addition to any liability that
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each director of the Company or WFS, to each officer of
the Company or WFS who has signed the Registration Statement and to each person,
if any, who controls the Company or WFS within the meaning of the Act.
9. Conditions. The several obligations of the Underwriters to purchase
the Securities under this Agreement are subject to the satisfaction of each of
the following conditions:
(a) All the representations and warranties of the Company and
WFS contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the
Closing Date.
(b) The Registration Statement shall have become effective not
later than ___P.M., North Carolina time, on the date of this Agreement
or at such later date and time as the Representative may approve in
writing, and at the Closing Date no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been commenced or shall be
pending before or contemplated by the Commission.
(c) Since June 30, 1999, there shall not have been any
material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or
in the earnings, affairs or business prospects, whether or not arising
in the ordinary course of business, of the Company or WFS. On the
Closing Date, the Representative shall have received (i) a certificate
dated the Closing Date, signed by the President or a Vice President of
the Company, confirming the matters set forth in paragraphs (a) (as to
the Company's representations and warranties only), (b) and (c) of this
Section (as to the Company only), and (ii) a certificate dated the
Closing Date, signed by the President or a Vice President of WFS,
confirming the matters set forth in paragraphs (a) and (c) of this
Section. Such officers may in each certificate rely upon the best of
their information and belief as to proceedings contemplated.
(d) The Representative shall have received the opinion of
Mitchell, Silberberg & Knupp LLP, counsel for the Company, dated the
Closing Date and satisfactory to counsel to the Underwriters, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the
State of California, with corporate power and authority to own
its properties, to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
this Agreement and each of the Basic Documents to which it is
a party, and is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the location
of its properties or the character of its operations makes
such qualification necessary, except such jurisdictions, if
any, in which the failure to be
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<PAGE> 14
so qualified will not have a material adverse effect on either
the business or properties of the Company.
(ii) The statements in the Prospectus set forth under
the captions "Summary of Prospectus", "The Notes", "The
Certificates", "The Contracts Pool" and "Certain Information
Regarding the Securities", insofar as such statements purport
to summarize certain provisions of the Notes, the Certificates
or the Basic Documents, provide a fair summary of such
provisions, and the statements in the Prospectus under the
captions "Summary of Prospectus -- Tax Status", " -- ERISA
Considerations", "Certain Legal Aspects of the Contracts",
"Certain Federal Income Tax Consequences", "Certain California
Income Tax Consequences" and "ERISA Considerations", to the
extent such statements constitute matters of law or legal
conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material
respects.
(iii) For federal income tax purposes, the Notes will
be considered debt, the Trust will not be an association
taxable as a corporation and the Trust will not be a publicly
traded partnership taxable as a corporation. The trust fund
created by the Trust Agreement will not, for California income
tax purposes, be classified as an association taxable as a
corporation, and Certificateholders and Noteholders who are
not residents of or otherwise subject to tax in California
will not, solely by reason of their acquisition of an interest
in any Class of Notes or the Certificates, be subject to
California income, franchise, excise or similar taxes with
respect to interest on any Class of Notes or the Certificates
or with respect to any of the other Trust property.
(iv) Each of this Agreement and the Indemnification
Agreement has been duly authorized, executed and delivered by
the Company.
(v) Each Basic Document (other than the
Indemnification Agreement) to which the Company is a party has
been duly authorized, executed and delivered by the Company
and, assuming the due authorization, execution and delivery by
the other parties thereto, constitutes the valid, legal and
binding obligation of the Company, enforceable against the
Company, in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other laws now or hereafter in
effect affecting the enforcement of creditors' rights
generally, and except that no opinion is expressed as to the
availability of remedies of specific performance, injunction
or other forms of equitable relief, all of which may be
subject to certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before which any
proceeding therefor may be brought.
(vi) Assuming the due authorization, execution and
delivery of each Basic Document to which the Trust is a party
by the Owner Trustee, on behalf of the Trust, and by each
other party thereto (other than the Company) each such Basic
Document constitutes the valid, legal and binding obligation
of the Trust enforceable against the Trust in accordance with
its terms, except as
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<PAGE> 15
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other laws now or hereafter in
effect affecting the enforcement of creditors' rights
generally, and except that no opinion is expressed as to the
availability of remedies of specific performance, injunction
or other forms of equitable relief, all of which may be
subject to certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before which any
proceeding therefor may be brought.
(vii) The Certificates, when executed and
authenticated in accordance with the Trust Agreement and
delivered and paid for pursuant to this Agreement, will be
validly issued and outstanding and entitled to the benefits of
the Trust Agreement.
(viii) The Notes, when executed and authenticated in
accordance with the Indenture and delivered and paid for
pursuant to this Agreement, will be entitled to the benefits
of the Indenture and will constitute legal, valid and binding
obligations of the Trust, entitled to the benefits of the
Indenture, and enforceable in accordance with their terms and
the terms of the Indenture (subject to the security interest
afforded to Financial Security under the Insurance Agreement),
subject, with respect to each of the Indenture and the Notes,
to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting creditors' rights
generally, and except that no opinion is expressed as to the
availability of remedies of specific performance, injunction
or other forms of equitable relief, all of which may be
subject to certain tests of equity jurisdiction, equitable
defenses and the discretion of the court before which any
proceeding therefor may be brought.
(ix) As to each security interest in a Financed
Vehicle created by a Contract, no filing or other action is
necessary to perfect or continue the perfected status of such
security interest as against creditors of or transferees from
the obligor under such Contract, so long as such Financed
Vehicle is not removed from the State of California for a
period longer than four months, or before the end of such
four-month period, WFS perfects such security interest under
applicable law; provided that (A) no opinion is rendered as to
a security interest in a Financed Vehicle as to which neither
a properly endorsed certificate of title naming WFS or an
affiliate or predecessor of WFS as legal owner nor an
application for an original registration together with an
application for registration of WFS or an affiliate or
predecessor of WFS as legal owner, has been deposited with the
California Department of Motor Vehicles, and (B) no opinion is
given as to the enforceability of the security interest in a
Financed Vehicle as against a subsequent owner of a Financed
Vehicle or a holder or assignee of a certificate of title
relating to such Financed Vehicle through fraudulent or
negligent transfer of such certificate of title.
(x) The Sale and Servicing Agreement, together with
the filing referred to in this subsection, creates and
perfects the ownership interest of the Trust in the Contracts
which is a valid first priority ownership interest (subject to
15
<PAGE> 16
the security interest afforded to Financial Security under the
Insurance Agreement); a financing statement with respect to
the Contracts has been filed with the Secretary of State of
the State of California pursuant to the California Uniform
Commercial Code, as amended, and with the Secretary of State
of the State of Delaware, pursuant to the Delaware Uniform
Commercial Code, as amended; and no other filings in any
jurisdiction or any other actions are necessary to perfect the
ownership interest of the Trustee in the Contracts against any
third parties.
(xi) The Indenture constitutes a grant by the Trust
to the Indenture Trustee of a valid security interest in the
Contracts, the security interests in the Financed Vehicles
securing the Contracts and the proceeds of each of the
foregoing (subject to the security interest afforded to
Financial Security under the Insurance Agreement), which
security interest has been perfected by the filing of
financing statements with the Secretary of State of the State
of California and the Secretary of State of the State of
Delaware, each as pursuant to the Uniform Commercial Code as
in effect in such state. No filing or other action, other than
the filing of the financing statements referred to above, is
necessary to perfect and maintain the interest or the security
interest of the Indenture Trustee in the Contracts, the
security interests in the Financed Vehicles securing the
Contracts and the proceeds of each of the foregoing against
third parties (subject to the security interest afforded to
Financial Security under the Insurance Agreement).
(xii) The Company's assignment and delivery of the
Contracts to the Trust will vest in the Trust all of the
Company's right, title and interest therein, subject to no
prior lien, mortgage, security interest, pledge, adverse
claim, charge or other encumbrance, except that such security
interest will be subject to the security interest afforded to
Financial Security under the Insurance Agreement.
(xiii) The Trust's assignment of the Contracts to the
Indenture Trustee pursuant to the Indenture will vest in the
Indenture Trustee, for the benefit of the Noteholders, a first
priority perfected security interest therein, subject to no
prior lien, mortgage, security interest, pledge, adverse
claim, charge or other encumbrance.
(xiv) The Registration Statement has become effective
under the Act and the Prospectus has been filed with the
Commission, pursuant to Rule 424(b) and, to the best of the
knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or
are pending or contemplated.
(xv) No order, consent or other authorization or
approval of any court, public board or governmental body is
legally required for the performance by the Company of its
obligations under this Agreement or any of the Basic Documents
to which the Company is a party, except such as have been
obtained under the Act, such as may be required under the Blue
Sky laws of any jurisdiction in connection with the purchase
and distribution of the Securities by the
16
<PAGE> 17
Underwriters, such as have been obtained from the Office of
Thrift Supervision and such other approvals (specified in such
opinion) as have been obtained.
(xvi) Neither the consummation of the transactions
contemplated in this Agreement or any Basic Document to which
the Company is a party, nor the fulfillment of the terms
hereof or thereof will conflict with, result in a breach of,
or constitute a default under the articles of incorporation or
bylaws of the Company or the terms of (A) any indenture or
other agreement or instrument known to such counsel and to
which the Company or any of its subsidiaries is a party or is
bound, or (B) any judgment, order or decree known to such
counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over the Company or any of its subsidiaries, except, in the
case of clauses (A) and (B), for defaults, breaches or
violations that do not, in the aggregate, have a material
adverse affect on the Company.
(xvii) To the best knowledge of such counsel, there
is no legal or governmental proceeding pending or threatened
to which the Trust or the Company is, or is threatened to be,
a party or of which the business or property of the Trust or
the Company is, or is threatened to be, the subject that is
material to the business or financial condition of the Trust
or the Company and is not disclosed in the Prospectus.
(xviii) There is no contract or other document known
to such counsel of a character required to be described in the
Prospectus or to be filed as an exhibit to the Registration
Statement that is not described or filed as required.
(xix) Neither the Trust nor the Company is an
"investment company" and neither is "controlled" by an
"investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
(xx) The Company has obtained all material licenses,
permits and other governmental authorizations which are
necessary to the conduct of its business; such licenses,
permits and other governmental authorizations are in full
force and effect, and the Company is in all material respects
complying therewith; and the Company is otherwise in
compliance with all laws, rules, regulations and statutes of
any jurisdiction to which it is subject, except where
non-compliance would not have a material adverse effect on the
Company.
(xxi) Except as to the financial statements and other
financial and statistical data included therein, as to which
such counsel need not express any opinion, such counsel (A) is
of the opinion the Registration Statement and the Prospectus
and any supplements or amendments thereto (except for the
financial statements and other financial or statistical data
included therein and the Form T-1) comply as to form in all
material respects with the Act and the 1939 Act and (B)
believes that the Registration Statement (except for the
financial statements and other financial or statistical data
included therein, the information regarding
17
<PAGE> 18
Financial Security included therein and the Form T-1), at the
time the Registration Statement became effective, did not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading and
the Prospectus (except for the financial statements and other
financial or statistical data included therein and the
information regarding Financial Security included therein) at
the date hereof and at the Closing Date did not and does not
contain any untrue statement of a material fact and did not
and does not omit to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(xxii) The documents incorporated or deemed to be
incorporated by reference in the Prospectus (other than the
financial statements, supporting schedules and other financial
data therein, as to which no opinion need be rendered), when
they were filed with the Commission, complied as to form in
all material respects with the applicable requirements of the
Exchange Act and the Exchange Act Regulations.
(xxiii) The Indenture has been duly qualified under
the 1939 Act and the Trust Agreement is not required to be
qualified under the 1939 Act.
(e) The Representative shall have received the opinion of Guy
Du Bose, Esq., General Counsel of WFS, General Counsel of Western
Financial Bank (the "Bank"), General Counsel of WFS Financial Auto
Loans 2, Inc. ("WFAL 2") and General Counsel of WII, dated the Closing
Date and satisfactory to counsel to the Underwriters, to the effect
that:
(i) Each of WFS and WII has been duly incorporated
and is validly existing and in good standing under the laws of
the State of California, with corporate power and authority to
own its properties, to conduct its business as described in
the Prospectus and to enter into and perform its obligations
under this Agreement and each of the Basic Documents to which
it is a party, and is duly qualified and in good standing as a
foreign corporation in each jurisdiction in which the location
of its properties or the character of its operations makes
such qualification necessary, except such jurisdictions, if
any, in which the failure to be so qualified will not have a
material adverse effect on either the business or properties
of WFS or WII, as the case may be.
(ii) This Agreement has been duly authorized,
executed and delivered by WFS.
(iii) Each Basic Document to which each of WFS or WII
is a party has been duly authorized, executed and delivered by
WFS or WII, as the case may be, and each Basic Document other
than the Indemnification Agreement constitutes a legal, valid
and binding agreement of WFS or WII, as the case may be,
enforceable against WFS or WII, as the case may be, in
accordance with its terms, except as enforceability thereof
may be subject to or limited by bankruptcy,
18
<PAGE> 19
insolvency, reorganization or other laws, provisions or
principles now or hereafter in effect affecting the
enforcement of creditors' rights generally except that no
opinion is expressed as to the availability of remedies of
specific performance, injunction or other forms of equitable
relief, all of which may be subject to certain tests of equity
jurisdiction, equitable defenses and the discretion of the
court before which any proceeding therefor may be brought.
(iv) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
performance by each of WFS or WII of its respective
obligations under this Agreement and any of the Basic
Documents to which it is a party, except such as have been
obtained.
(v) Neither the consummation of any of the
transactions contemplated by this Agreement and each of the
Basic Documents to which WFS or WII is a party nor the
fulfillment of the terms hereof or thereof will conflict with,
result in a breach of, or constitute a default under, the
respective articles of incorporation or bylaws of WFS or WII,
as the case may be, or the terms of (A) any indenture or other
agreement or instrument known to such counsel and to which WFS
or WII, as the case may be, or any of its subsidiaries is a
party or is bound or (B) any judgment, order or decree known
to such counsel to be applicable to WFS or any of its
subsidiaries or WII, as the case may be, of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over WFS or any of its
subsidiaries or WII, as the case may be, except, in the case
of clauses (A) and (B), for defaults, breaches or violations
that do not, in the aggregate, have an adverse material effect
on WFS or WII, as the case may be.
(vi) To the best knowledge of such counsel, there is
no legal or governmental proceeding pending or threatened to
which WFS or WII, as the case may be, is, or is threatened to
be, a party or of which its business or property is, or is
threatened to be, the subject that would have a material
adverse effect on the ability of WFS or WII, as the case may
be, to perform its obligations under any of the Basic
Documents to which it is a party.
(vii) Each of WFS and WII has obtained all material
licenses, permits and other governmental authorizations which
are necessary to the conduct of its business; such licenses,
permits and other governmental authorizations are in full
force and effect, and each of WFS and WII is in all material
respects complying therewith; and each of WFS and WII is
otherwise in compliance with all laws, rules, regulations and
statutes of any jurisdiction to which it is subject, except
where non-compliance would not have a material adverse effect
on WFS or WII, as the case may be, or, in the case of the
Contracts, would not cause the Contracts to be unenforceable.
(viii) The Bank has been duly organized and is
validly existing and in good standing as a Federal association
pursuant to the laws of the United States of America, with the
authority within its charter to own its properties, to conduct
its business as described in the Prospectus and to enter into
and perform its
19
<PAGE> 20
obligations under the Reinvestment Contract dated as of
November 1, 1999, among the Bank, WFAL 2 and the Indenture
Trustee (the "Reinvestment Contract"), and the Sale and
Assignment dated as of November 1, 1999, from the Bank to WFS
of the Contracts (collectively with the Reinvestment Contract,
the "Bank Agreements").
(ix) Each of the Bank Agreements has been duly
authorized, executed and delivered by the Bank and constitutes
a legal, valid and binding instrument enforceable against the
Bank in accordance with its terms, except as enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization or other laws, provisions or principles now or
hereafter in effect affecting the enforcement of creditors'
rights generally or the rights of creditors of savings banks
the accounts of which are insured by the Federal Deposit
Insurance Corporation and except that no opinion is expressed
as to the availability of remedies of specific performance,
injunction or other forms of equitable relief, all of which
may be subject to certain tests of equity jurisdiction,
equitable defenses and the discretion of the court before
which any proceeding therefor may be brought.
(x) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
consummation of the transactions contemplated by the Bank
Agreements except such as have been obtained under the Act and
such as have been obtained from the Office of Thrift
Supervision.
(xi) Neither the consummation of any of the
transactions contemplated by the Bank Agreements, nor the
fulfillment of the terms thereof, will conflict with, result
in a breach of, or constitute a default under the Charter or
bylaws of the Bank or (i) the terms of any indenture or other
agreement or instrument known to such counsel to be applicable
to the Bank or any of its subsidiaries or (ii) any judgment,
order or decree known to such counsel to be applicable to the
Bank or any of its subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Bank or any of its subsidiaries, except
in the case of clauses (i) and (ii), for defaults, breaches or
violations that do not in the aggregate, have a material
adverse effect on the Bank.
(xii) The Bank is in compliance with all applicable
state and federal laws regarding its continued operation,
including those pertaining to the origination of the
Contracts, other than those laws the Bank's non-compliance
with which would not materially affect its ability to perform
its obligations under the Bank Agreements or, in the case of
the origination of the Contracts, would not cause the
Contracts to be unenforceable.
(xiii) WFAL 2 has been duly incorporated and is
validly existing and in good standing under the laws of the
State of California, with corporate power and authority to own
its properties, to conduct its business as described in the
Prospectus and to enter into and perform its obligations under
the Reinvestment
20
<PAGE> 21
Contract and the Sale and Assignment, dated as of November __,
1999, from WFAL 2 to WFS of the Contracts (collectively with
the Reinvestment Contract, the "WFAL 2 Agreements"), and is
duly qualified and in good standing as a foreign corporation
in each jurisdiction in which the location of its properties
or the character of its operations makes such qualification
necessary, except such jurisdictions, if any, in which the
failure to be so qualified will not have a material adverse
effect on either the business or properties of WFAL 2, as the
case may be.
(xiv) Each of the WFAL 2 Agreements has been duly
authorized, executed and delivered by WFAL 2, and constitutes
a legal, valid and binding agreement of WFAL 2, enforceable
against WFAL 2, in accordance with its terms, except as
enforceability thereof may be subject to or limited by
bankruptcy, insolvency, reorganization or other laws,
provisions or principles now or hereafter in effect affecting
the enforcement of creditors' rights generally except that no
opinion is expressed as to the availability of remedies of
specific performance, injunction or other forms of equitable
relief, all of which may be subject to certain tests of equity
jurisdiction, equitable defenses and the discretion of the
court before which any proceeding therefor may be brought.
(xv) No consent, approval, authorization or order of
any court or governmental agency or body is required for the
performance by WFAL 2 of its obligations under the WFAL 2
Agreements, except such as have been obtained.
(xvi) Neither the consummation of any of the
transactions contemplated by the WFAL 2 Agreements nor the
fulfillment of the terms hereof or thereof will conflict with,
result in a breach of, or constitute a default under, the
articles of incorporation or bylaws of WFAL 2, or the terms of
(A) any indenture or other agreement or instrument known to
such counsel and to which WFAL 2 is a party or is bound or (B)
any judgment, order or decree known to such counsel to be
applicable to WFAL 2, of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over WFAL 2, except, in the case of clauses (A)
and (B), for defaults, breaches or violations that do not, in
the aggregate, have an adverse material effect on WFAL 2.
(xvii) To the best knowledge of such counsel, there
is no legal or governmental proceeding pending or threatened
to which WFAL 2, as the case may be, is, or is threatened to
be, a party or of which its business or property is, or is
threatened to be, the subject that would have a material
adverse effect on the ability of WFAL 2, to perform its
obligations under any of the WFAL 2 Agreements.
(xviii) WFAL 2 has obtained all material licenses,
permits and other governmental authorizations which are
necessary to the conduct of its business; such licenses,
permits and other governmental authorizations are in full
force and effect, and is in all material respects complying
therewith; and WFAL 2 is otherwise in compliance with all
laws, rules, regulations and statutes of any
21
<PAGE> 22
jurisdiction to which it is subject, except where
non-compliance would not have a material adverse effect on
WFAL 2.
(f) The Representative shall have received from
Mitchell, Silberberg & Knupp LLP, counsel for the Company, a
letter dated the Closing Date to the effect that the
Underwriters may rely upon each opinion rendered by such
counsel to either Standard & Poor's or Moody's Investors
Service, Inc. in connection with the rating of any of the
Securities, as if each such opinion were addressed to the
Underwriters.
(g) The Representative shall have received the
opinion of Brian H. Mellstrom, Esq., Assistant General Counsel
for Financial Security, dated the Closing Date and
satisfactory to counsel to the Underwriters.
(h) The Representative shall have received the
opinion addressed to the Underwriters and to WFS from
Richards, Layton & Finger, counsel to the Owner Trustee, dated
the Closing Date and satisfactory in form and substance to
counsel to the Underwriters and to counsel to the Company, to
the effect that:
(i) The Owner Trustee has been duly
incorporated and is validly existing as a banking
corporation in good standing under the laws of the
State of Delaware.
(ii) The Owner Trustee has full corporate
trustee power and authority to enter into and perform
its obligations under the Trust Agreement and, on
behalf of the Trust, under the Indenture, the Sale
and Servicing Agreement and the Administration
Agreement.
(iii) The execution and delivery of the
Trust Agreement and, on behalf of the Trust, of the
Indenture, the Sale and Servicing Agreement, the
Administration Agreement, the Certificates and the
Notes and the performance by the Owner Trustee of its
obligations under the Trust Agreement, the Indenture,
the Sale and Servicing Agreement and the
Administration Agreement have been duly authorized by
all necessary corporate action of the Owner Trustee
and each has been duly executed and delivered by the
Owner Trustee.
(iv) The Trust Agreement, the Sale and
Servicing Agreement, the Indenture and the
Administration Agreement constitute valid and binding
agreements of the Owner Trustee, enforceable against
the Owner Trustee in accordance with their terms,
subject, as to enforcement of remedies, (A) to
applicable bankruptcy, insolvency and reorganization,
generally, and (B) to general principles of equity
(regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(v) The execution and delivery by the Owner
Trustee of the Trust Agreement and, on behalf of the
Trustee, of the Indenture, the Sale and Servicing
Agreement and the Administration Agreement do not
require any consent, approval or authorization of, or
any registration or filing with, any Delaware or
United States Federal governmental authority having
jurisdiction over the trust
22
<PAGE> 23
power of the Owner Trustee, other than those
consents, approvals or authorizations as have been
obtained and the filing of the Certificate of Trust
with the Secretary of State of the State of Delaware.
(vi) The Notes have been duly authorized,
executed and issued by the Trust. (vii) The
Certificates have been duly authorized, executed and
issued by the Trust.
(viii) The execution and delivery by the
Owner Trustee of the Trust Agreement and, on behalf
of the Trust, the Sale and Servicing Agreement, the
Indenture and the Administration Agreement, and the
performance by the Owner Trustee of its obligations
thereunder do not conflict with, result in a breach
or violation of or constitute a default under, the
Articles of Association or By-laws of the Owner
Trustee.
(i) The Representative shall have received an opinion
addressed to the Underwriters and to WFS, dated as of the
Closing Date, of Richards, Layton & Finger, special Delaware
counsel to the Trust, in form and substance satisfactory to
counsel to the Underwriters and counsel to WFS, to the effect
that:
(i) The Trust has been duly formed and is
validly existing as a business trust pursuant to the
laws of the State of Delaware, 12 Del. C. Section
3801, et seq.
(ii) The Trust Agreement authorizes the
Trust to execute and deliver the Indenture, the Sale
and Servicing Agreement and the Administration
Agreement, to issue the Certificates and Notes and to
grant the trust estate to the Indenture Trustee as
security for the Notes.
(iii) Assuming that the Certificates have
been duly authorized, executed and issued by the
Trust, when delivered to the Underwriter and paid for
by the Underwriter pursuant to this Agreement, the
Certificates have been validly issued and are
entitled to the benefits of the Trust Agreement.
(iv) Except for the timely filing in the
future of continuation statements with respect to the
financing statements, no other filing is required in
the State of Delaware in order to make effective the
lien of the Indenture. Insofar as the Delaware
Uniform Commercial Code, 6 Del. C.Section 9-101 et
seq. (the "UCC"), applies (without regard to conflict
of laws principles) and, assuming that the security
interests in that portion of the trust estate that
consists of general intangibles, accounts or chattel
paper, as defined under the UCC, have been duly
created and have attached, the Indenture Trustee has
a perfected security interest in such general
intangibles, accounts or chattel paper and, assuming
that the UCC search accurately lists all the
financing statements filed naming the Trust as debtor
and describing any portion of the trust estate
consisting of such general intangibles, accounts or
chattel paper, the security interest of the Indenture
23
<PAGE> 24
Trustee will be prior to the security interest of all
other creditors, except that such security interest
will be subject to the security interest afforded to
Financial Security under the Insurance Agreement, and
excluding purchase money security interests
under Section 9-312(4) of the UCC, and temporarily
perfected security interests pursuant
to Section 9-306(3) of the UCC (as to the priority of
temporarily unrecorded security interests in
proceeds), subject to customary and usual exceptions.
(v) No creditor of the Seller or any
Certificateholder shall have any right to obtain
possession or, or otherwise legal or equitable
remedies with respect to, the property of the Trust.
(vi) Assuming that the Sale and Servicing
Agreement conveys good title to the Trust Property
referred to therein to the Trust as a true sale and
not as a security arrangement, the Trust rather than
the Seller is the owner of the Trust Property.
(j) The Representative shall have received an opinion
addressed to the Underwriters and to WFS from White & Case,
counsel to the Indenture Trustee, dated the Closing Date and
satisfactory in form and substance to counsel to the
Underwriters and to special counsel to WFS to the effect that:
(i) The Indenture Trustee has been duly
incorporated and is validly existing as a banking
corporation under the laws of the State of New York.
(ii) The Indenture Trustee, at the time of
its execution and delivery of the Indenture, had full
power and authority to execute and deliver the
Indenture and has full power and authority to perform
its obligations thereunder.
(iii) The Indenture has been duly and
validly authorized, executed and delivered by the
Indenture Trustee and, assuming due authorization,
execution and delivery thereof by the Trustee,
constitutes the valid and binding obligation of the
Indenture Trustee enforceable against the Indenture
Trustee in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy,
insolvency or other laws relating to or affecting
creditors' rights or by general principles of equity.
(iv) To the best of such counsel's
knowledge, there are no actions, proceedings or
investigations pending or threatened against or
affecting the Indenture Trustee before or by any
court, arbitrator, administrative agency or other
governmental authority which, if adversely decided,
would materially and adversely affect the ability of
the Indenture Trustee to carry out the transactions
contemplated in the Indenture.
(v) No consent, approval or authorization of, or
registration, declaration or filing with, any court or
governmental agency or body of the United States of America or
any state thereof was or is required for the execution,
delivery or performance by the Indenture Trustee of the
Indenture.
24
<PAGE> 25
(k) The Representative shall have received the opinion of
Brown & Wood LLP, counsel to the Underwriters, dated the Closing Date,
with respect to the issuance and sale of the Notes, the Registration
Statement, the Prospectus and other related matters as the
Representative may reasonably require, and the Company and WFS shall
have furnished to counsel to the Underwriters such documents as they
may reasonably request for the purpose of enabling them to pass upon
such matters.
(l) The Representative shall have received letters in form and
substance satisfactory to the Representative, addressed to the
Underwriters and dated the date hereof and the Closing Date, from Ernst
& Young LLP, independent public accountants for the Company,
substantially in the forms heretofore approved by the Representative.
(m) At the Closing Date each Class of Notes and the
Certificates shall have been rated in the highest category by each of
Moody's and Standard & Poor's, as nationally recognized rating
agencies, with regard to the benefit afforded the Notes under the Note
Policy and the Certificates under the Certificate Policy, and such
ratings shall be in full force and effect and subsequent to the
execution and delivery of this Agreement and prior to the Closing Date,
there shall not have been any downgrading, nor any notice given by any
"nationally recognized statistical rating organization," as such term
is defined for purposes of Rule 436(g)(2) under the Act (a "Rating
Agency"), to the public or the Company of any intended or potential
downgrading or of a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any Rating Agency.
(n) The Representative shall have received the Indemnification
Agreement executed by all parties thereto.
10. Effective Date of Agreement and Termination. This Agreement shall
become effective upon the later of (i) execution of this Agreement and (ii)
receipt of notification of the effectiveness of the Registration Statement by
the Company or the Representative.
This Agreement may be terminated at any time prior to the Closing Date
by the Representative by written notice to the Company if any of the following
has occurred: (i) since the respective dates as of which information is given in
the Registration Statement and the Prospectus, any adverse change or development
involving a prospective adverse change in or affecting particularly the
condition, financial or otherwise, of the Company or WFS or the earnings,
affairs or business prospects of the Company or WFS, whether or not arising in
the ordinary course of business, which would, in the reasonable judgment of the
Representative, make the offering or delivery of any Class of Notes or the
Certificates impracticable, (ii) any outbreak of hostilities or other national
or international calamity or crisis or material change in economic conditions,
if the effect of such outbreak, calamity, crisis or change on the financial
markets of the United States or elsewhere would, in the reasonable judgment of
the Representative, make the offering or delivery of any Class of Notes or the
Certificates impracticable, (iii) suspension of trading in securities on the New
York Stock Exchange or the American Stock Exchange or limitation on prices
(other than limitations on hours or numbers of days of trading) for securities
on either such Exchange, (iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order of any
court or other
25
<PAGE> 26
governmental authority which in the reasonable opinion of the Representative
materially and adversely affects, or will materially and adversely affect, the
business or operations of the Company, (v) declaration of a banking moratorium
by either federal or _____ State authorities or (vi) the taking of any action by
any federal, state or local government or agency in respect of its monetary or
fiscal affairs which in the reasonable opinion the Representative has a material
adverse effect on the financial markets in the United States.
11. Miscellaneous. All communications hereunder will be in writing and
notices given pursuant to any provision of this Agreement shall be addressed as
follows: (i) if to the Company, to Guy Du Bose, Esq. at his office at 23 Pasteur
Road, Irvine, California 92618, (ii) if to WFS, to Guy Du Bose, Esq. at his
office at 23 Pasteur Road, Irvine, California 92618 or (iii) if to any
Underwriter, through the Representative at Banc of America Securities LLC, 100
North Tyron Street, Bank of America Corporate Center, 10th Floor, Charlotte,
North Carolina 28255 or in any case to such other address as the person to be
notified may have requested in writing; provided, however, that any notice to an
Underwriter pursuant to Section 8 will be mailed, delivered or telegraphed and
confirmed to such Underwriter. Any such notice will take effect at the time of
receipt.
The respective indemnities, contribution agreements, representations,
warranties and other statements of WFS, the Company, their respective officers
and directors and of the Underwriters set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will survive
delivery of and payment for the Securities, regardless of (i) any investigation,
or statement as to the results thereof, made by or on behalf of the Underwriters
or by or on behalf of the Company, its officers or directors or any controlling
person of the Company or WFS, (ii) acceptance of the Securities and payment for
them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Representative because of
any failure or refusal on the part of the Company or WFS to comply with the
terms or to fulfill any of the conditions of this Agreement, or pursuant to any
other provision hereof (other than by notice given to the Company with respect
to clauses (ii) through (vi) of the second paragraph of Section 10 hereof), the
Company and WFS agree to reimburse the Underwriters for all of their
out-of-pocket expenses (including the fees and disbursements of counsel to the
Underwriters) reasonably incurred by the Underwriters.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, WFS and the
Underwriters, any controlling persons referred to herein and their respective
successors and assigns, all as and to the extent provided in this Agreement, and
no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include a purchaser of
any of the Securities from the Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
26
<PAGE> 27
The Representative will act for the several Underwriters in connection
with the transactions described in this Agreement and any action taken by the
Representative under this Agreement will be binding upon all of the
Underwriters.
27
<PAGE> 28
If the foregoing is in accordance with your understanding of the
agreement among the Company, WFS and the Underwriters, kindly sign and return to
us the enclosed duplicate hereof, whereupon it will become a binding agreement
among the Company, WFS and the several Underwriters in accordance with its
terms.
Very truly yours,
WFS FINANCIAL AUTO LOANS, INC.
By:
-----------------------------------------
Name:
Title:
WFS FINANCIAL INC
By:
-----------------------------------------
Name:
Title:
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first written above:
BANC OF AMERICA SECURITIES LLC as
Representative of the several
Underwriters named on Schedule I hereto
By:
-----------------------------------
Name:
Title:
28
<PAGE> 29
SCHEDULE I
<TABLE>
<CAPTION>
Amount of Amount of Amount of
Class A-1 Class A-2 Class A-3
Underwriter Notes Notes Notes
- ----------- --------- --------- ---------
<S> <C> <C> <C>
Banc of America Securities LLC........... $ ______ $ ______ $ ______
Credit Suisse First Boston Corporation ______ ______ ______
Total $ ______ $ ______ $ ______
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Amount of
Class A-4 Amount of
Underwriter Notes Certificates
- ----------- --------- ------------
<S> <C> <C>
Banc of America Securities LLC........... $ ______ $ ______
Credit Suisse First Boston Corporation ______ ______
Donaldson, Lufkin & Jenrette ______ ______
Total $ ______ $ ______
======== ========
</TABLE>
S-1
<PAGE> 1
EXHIBIT 4.1
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
among
WFS FINANCIAL AUTO LOANS, INC.,
WFS INVESTMENTS, INC.,
FINANCIAL SECURITY ASSURANCE INC.
and
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
Dated as of November 3, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE
DEFINITIONS
Section 1.01. Capitalized Terms....................................... 1
Section 1.02. Other Definitional Provisions........................... 4
Section 1.03. Usage of Terms.......................................... 5
Section 1.04. Section References...................................... 5
Section 1.05. Accounting Terms........................................ 5
ARTICLE TWO
ORGANIZATION
Section 2.01. Name.................................................... 6
Section 2.02. Office.................................................. 6
Section 2.03. Purposes and Powers..................................... 6
Section 2.04. Appointment of Owner Trustee............................ 7
Section 2.05. Initial Capital Contribution of Owner Trust Estate...... 7
Section 2.06. Declaration of Trust.................................... 7
Section 2.07. Title to Trust Property................................. 7
Section 2.08. Situs of Trust.......................................... 7
Section 2.09. Representations and Warranties of the Depositor
and the Company......................................... 8
Section 2.10. Federal Income Tax Allocations.......................... 10
ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership....................................... 11
Section 3.02. The Trust Certificates.................................. 11
Section 3.03. Authentication and Delivery of Trust Certificates....... 11
Section 3.04. Registration of Transfer and Exchange of Trust
Certificates............................................ 11
Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust
Certificates............................................ 13
Section 3.06. Persons Deemed Owners................................... 13
Section 3.07. Access to List of Certificateholders' Names and
Addresses............................................... 13
Section 3.08. Maintenance of Office or Agency......................... 13
Section 3.09. Temporary Trust Certificates............................ 14
Section 3.10. Appointment of Paying Agent............................. 14
Section 3.11. Ownership by the Company of Trust Certificates.......... 15
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.12. Book-Entry Certificates................................. 15
Section 3.13. Notices to Clearing Agency.............................. 16
Section 3.14. Definitive Trust Certificates........................... 16
ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Owners with Respect to Certain
Matters................................................. 17
Section 4.02. Action by Owners with Respect to Certain Matters........ 17
Section 4.03. Action by Owners with Respect to Bankruptcy............. 18
Section 4.04. Restrictions on Owners' Power........................... 18
Section 4.05. Majority Control........................................ 18
ARTICLE FIVE
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01. Establishment of Trust Account.......................... 19
Section 5.02. Application of Trust Funds.............................. 19
Section 5.03. Method of Payment....................................... 19
Section 5.04. No Segregation of Monies; No Interest................... 20
Section 5.05. Accounting and Reports to the Noteholders,
Owners, the Internal Revenue Service and Others......... 20
Section 5.06. Signature on Returns; Tax Matters Partner............... 20
ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority....................................... 21
Section 6.02. General Duties.......................................... 21
Section 6.03. Action Upon Instruction................................. 21
Section 6.04. No Duties Except as Specified in this Agreement or in
Instructions............................................ 22
Section 6.05. No Action Except Under Specified Documents or
Instructions............................................ 22
Section 6.06. Restrictions............................................ 23
ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties......................... 24
Section 7.02. Furnishing of Documents................................. 25
Section 7.03. Representations and Warranties.......................... 25
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 7.04. Reliance; Advice of Counsel............................. 25
Section 7.05. Not Acting in Individual Capacity....................... 26
Section 7.06. Owner Trustee Not Liable for Trust Certificates, Notes
or Contracts............................................ 26
Section 7.07. Owner Trustee May Own Trust Certificates and Notes...... 27
Section 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses... 27
ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses....................... 28
Section 8.02. Indemnification......................................... 28
Section 8.03. Payments to the Owner Trustee........................... 28
ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement.......................... 29
ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee.............. 31
Section 10.02. Resignation or Removal of Owner Trustee................. 31
Section 10.03. Successor Owner Trustee................................. 32
Section 10.04. Merger or Consolidation of Owner Trustee................ 32
Section 10.05. Appointment of Co-Trustee or Separate Trustee........... 32
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Supplements and Amendments.............................. 34
Section 11.02. No Legal Title to Trust Estate in Owners................ 35
Section 11.03. Limitations on Rights of Others......................... 35
Section 11.04. Notices................................................. 35
Section 11.05. Severability of Provisions.............................. 36
Section 11.06. Counterparts............................................ 36
Section 11.07. Successors and Assigns.................................. 36
Section 11.08. No Petition............................................. 36
Section 11.09. No Recourse............................................. 36
Section 11.10. Certificates Nonassessable and Fully Paid............... 37
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 11.11. Headings................................................ 37
Section 11.12. Governing Law........................................... 37
Section 11.13. Depositor Payment Obligation............................ 37
Section 11.14. Insurer Default or Insolvency........................... 37
EXHIBITS
Exhibit A - Form of Certificate Depository Agreement...................... A-1
Exhibit B - Form of Certificate of Trust.................................. B-1
Exhibit C - Form of Trust Certificate..................................... C-1
</TABLE>
(iv)
<PAGE> 6
This AMENDED AND RESTATED TRUST AGREEMENT, dated as of November 3, 1999,
is among WFS FINANCIAL AUTO LOANS, INC., a California corporation (the
"Depositor"), WFS INVESTMENTS, INC., a California corporation (the "Company"),
FINANCIAL SECURITY ASSURANCE INC., a New York corporation ("Financial
Security"), and CHASE MANHATTAN BANK DELAWARE, a Delaware corporation, as owner
trustee (the "Owner Trustee").
WHEREAS, in connection herewith, the Depositor is willing to assume
certain obligations pursuant hereto;
WHEREAS, in connection herewith, the Company is willing to purchase the
Company Trust Certificate (as defined herein) to be issued pursuant hereto and
to assume certain obligations pursuant hereto; and
WHEREAS, Financial Security is willing to issue a financial guaranty
insurance policy in respect of certain payments made on the Trust Certificates
to be issued pursuant hereto;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Capitalized Terms. Except as otherwise provided in this
Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Administration Agreement" means the administration agreement, dated as of
October 1, 1999, among the Trust, the Company, the Depositor, the Indenture
Trustee and WFS, as administrator.
"Agreement" means this Trust Agreement, as the same may be amended and
supplemented from time to time.
"Applicants" shall have the meaning assigned to such term in
Section 3.07.
"Benefit Plan" means (i) an employee benefit plan (as such term is defined
in Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in Section 4975(e)(1) of the Code or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity.
"Book-Entry Trust Certificate" means a beneficial interest in the Trust
Certificates, the ownership of which shall be evidenced, and transfers of which
shall be made, through book entries by a Clearing Agency as described in Section
3.12.
"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as the same may be amended from time to
time.
<PAGE> 7
"Certificate Depository Agreement" means the agreement dated November __,
1999, among the Trust, the Owner Trustee and DTC, as the initial Clearing
Agency, substantially in the form attached as Exhibit A hereto, relating to all
Trust Certificates other than the Company Trust Certificate, as the same may be
amended and supplemented from time to time.
"Certificate Distribution Account" means the account established and
maintained as such pursuant to Section 5.01.
"Certificate of Trust" means the Certificate of Trust filed for the Trust
pursuant to Section 3810(a) of the Business Trust Statute, substantially in the
form of Exhibit B hereto.
"Certificate Owner" means, with respect to a Book-Entry Trust Certificate,
the Person who is the owner of such Book-Entry Trust Certificate, as reflected
on the books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
either case in accordance with the rules of such Clearing Agency) and shall
mean, with respect to a Definitive Trust Certificate, the related
Certificateholder.
"Certificate Register" and "Certificate Registrar" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"Certificateholder" or "Holder" means the Person in whose name a Trust
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement or the other Basic Documents, the interest evidenced by any Trust
Certificate registered in the name of the Depositor, the Company, WFS or any of
their respective Affiliates shall not be taken into account in determining
whether the requisite percentage necessary to effect such consent, waiver,
request or demand in respect of the Trust Certificates shall have been obtained.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means November 3, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.
"Company" means WFS Investments, Inc., a California corporation, in its
capacity as Owner of the Company Trust Certificate hereunder, and its
successors.
"Company Trust Certificate" means the Trust Certificate purchased by the
Company on the Closing Date pursuant to Section 3.11, having an initial
principal balance equal to $525,000.
"Definitive Trust Certificates" shall have the meaning assigned to such
term in Section 3.12.
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<PAGE> 8
"Depositor" means WFS Financial Auto Loans, Inc. in its capacity
as depositor hereunder, and its successors.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employment Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expenses" shall have the meaning assigned to such term in
Section 8.02.
"Indemnified Parties" shall have the meaning assigned to such term in
Section 8.02.
"Indenture" means the indenture dated as of October 1, 1999, among the
Trust and Bankers Trust Company, as Indenture Trustee.
"Instructing Party" shall have the meaning assigned to such term in
Section 6.03(a).
"Insurer" means Financial Security Assurance, Inc., and its successors.
"Note Depository Agreement" means the agreement dated November __, 1999,
among the Trust, the Indenture Trustee and DTC, as the initial Clearing Agency,
relating to the Notes, as the same may be amended and supplemented from time to
time.
"Notes" means the Class A-1 Notes, the Class A-2 Notes and the Class A-3
Notes, in each case issued pursuant to the Indenture.
"Original Certificate Balance" means $52,500,000
"Owner" means each Holder of a Trust Certificate.
"Owner Trustee" means Chase Manhattan Bank Delaware, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"Owner Trustee Corporate Trust Office" means the office of the Owner
Trustee at which its corporate trust business shall be administered, which
initially shall be Chase Manhattan Bank Delaware, 1201 Market Street,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration
Department, with a copy to The Chase Manhattan Bank, 450 West 33rd Street, 15th
Floor, New York, New York 10001, Attention: Structured Finance Services (ABS),
or such other office at such other address as the Owner Trustee may designate
from time to time by notice to the Certificateholders, the Master Servicer, the
Depositor, the Company and the Insurer. The foregoing address of The Chase
Manhattan Bank shall be its address for purposes of its acting as Certificate
Registrar and as agent of the Owner Trustee pursuant to Sections 3.04 and 3.08,
or such other office at such other address as the Owner Trustee may designate
from time to time by notice to the Certificateholders, the Master Servicer, the
Depositor, the Company and the Insurer.
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<PAGE> 9
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 3.10.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Record Date" means, with respect to any Distribution Date, the day
immediately preceding such Distribution Date or, if Definitive Trust
Certificates are issued, the 15th day of the month preceding the month in which
such Distribution Date occurs.
"Sale and Servicing Agreement" means the sale and servicing agreement,
dated as of October 1, 1999, among the Trust, as Issuer, the Depositor, as
Seller and WFS, as Master Servicer, as the same may be amended or supplemented
from time to time.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Seller" means WFS Financial Auto Loans, Inc., in its capacity as seller
under the Sale and Servicing Agreement, and its successors.
"Treasury Regulations" means regulations, including proposed or temporary
regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" means the trust established by this Agreement.
"Trust Certificates" means the trust certificates evidencing the
beneficial interest of an Owner in the Trust, substantially in the form of
Exhibit C hereto.
"Trust Estate" means all right, title and interest of the Trust in and to
the property and rights assigned to the Trust pursuant to Article Two of the
Sale and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and all other property of the Trust from time to time, including
any rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing
Agreement and the Administration Agreement.
"Underwriters" means Banc of America Securities LLC, Donaldson,
Lufkin & Jenrette and Credit Suisse First Boston Corporation.
"WFS" means WFS Financial Inc, and its successors.
Section 1.02. Other Definitional Provisions. Capitalized terms used that
are not otherwise defined herein shall have the meanings ascribed thereto in the
Sale and Servicing Agreement or, if not defined therein, in the Indenture.
Section 1.03. Usage of Terms. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography and other means of
4
<PAGE> 10
reproducing words in a visible form; references to agreements and other
contractual instruments include all amendments, modifications and supplements
thereto or any changes therein entered into in accordance with their respective
terms and not prohibited by this Agreement; references to Persons include their
permitted successors and assigns; and the term "including" means "including
without limitation".
Section 1.04. Section References. All section references, unless otherwise
indicated, shall be to Sections in this Agreement.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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<PAGE> 11
ARTICLE TWO
ORGANIZATION
Section 2.01. Name. The Trust created hereby shall be known as "WFS
Financial 1999-C Owner Trust", in which name the Owner Trustee may conduct the
activities of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
Section 2.02. Office. The office of the Trust shall be in care of the
Owner Trustee at the Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Owners, the Depositor and the Insurer.
Section 2.03. Purposes and Powers.
(a) The sole purpose of the Trust is to conserve the Trust Estate and
collect and disburse the periodic income therefrom for the use and benefit of
the Owners, and in furtherance of such purpose to engage in the following
ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes and the
Trust Certificates;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to purchase the Contracts, to fund the Spread Account, to
pay the organizational, start-up and transactional expenses of the Trust
and to pay the balance to the Depositor pursuant to the Sale and Servicing
Agreement;
(iii) to Grant the Trust Estate pursuant to the Indenture and to
hold, manage and distribute to the Owners pursuant to the Sale and
Servicing Agreement any portion of the Trust Estate released from the Lien
of, and remitted to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary to accomplish the foregoing or are
incidental thereto or connected therewith; and
(vi) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of the Trust Estate and the making of distributions to the Owners and the
Noteholders.
The Trust shall not engage in any activities other than in connection with
the foregoing. Nothing contained herein shall be deemed to authorize the Owner
Trustee, on behalf of the Trust, to engage in any business operations or any
activities other than those set forth in the introductory sentence of this
Section. Specifically, the Owner Trustee, on behalf of the Trust, shall have no
authority to engage in any business operations, acquire any assets other than
those specifically included in the Trust Estate under Section 1.01 or otherwise
vary the assets held by
6
<PAGE> 12
the Trust. Similarly, the Owner Trustee shall have no discretionary duties other
than performing those ministerial acts set forth above necessary to accomplish
the purpose of the Trust as set forth in the introductory sentence of this
Section.
Section 2.04. Appointment of Owner Trustee. The Depositor hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein, and the Owner Trustee
hereby accepts such appointment.
Section 2.05. Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1.00. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust Estate and
shall be deposited in the Certificate Distribution Account. The Depositor shall
pay organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee, promptly reimburse the Owner Trustee for any such
expenses paid by the Owner Trustee.
Section 2.06. Declaration of Trust. The Owner Trustee hereby declares that
it will hold the Trust Estate in trust upon and subject to the conditions set
forth herein for the sole purpose of conserving the Trust Estate and collecting
and disbursing the periodic income therefrom for the use and benefit of the
Owners, subject to the obligations of the Trust under the Basic Documents. It is
the intention of the parties hereto that the Trust constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust. It is the intention of the parties
hereto that, solely for income and franchise tax purposes, the Trust shall be
treated as a partnership, with the assets of the partnership being the Contracts
and other assets held by the Trust and with the partners of the partnership
being the Certificateholders (including the Company and the Seller as the
recipient of certain excess cash flows as provided in Section 5.05 of the Sale
and Servicing Agreement) and the Notes being debt of the partnership. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the Owner
Trustee shall have all rights, powers and duties set forth herein and in the
Business Trust Statute for the sole purpose and to the extent necessary to
accomplish the purpose of the Trust as set forth in the introductory sentence of
Section 2.03.
Section 2.07. Title to Trust Property. Legal title to the Trust Estate
shall be vested at all times in the Trust as a separate legal entity except
where applicable law in any jurisdiction requires title to any part of the Trust
Estate to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Owner Trustee, a co-trustee and/or a separate
trustee, as the case may be.
Section 2.08. Situs of Trust. The Trust will be located and administered
in the State of Delaware. All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of California, the State of
Delaware or the State of New York. The Trust shall not have any employees in any
state other than Delaware; provided, however, that nothing herein shall restrict
or prohibit the Owner Trustee from having employees within or without the State
of Delaware. Payments will be received by the Trust only in Delaware or New York
and
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<PAGE> 13
payments will be made by the Trust only from Delaware or New York. The only
office of the Trust will be at the Owner Trustee Corporate Trust Office.
Section 2.09. Representations and Warranties of the Depositor and the
Company.
(a) The Depositor hereby represents and warrants to the Owner Trustee and
the Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws of
the State of California, with power and authority to own its properties
and to conduct its business and had at all relevant times, and has, power,
authority and legal right to acquire and own the Contracts.
(ii) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business requires such qualifications.
(iii) The Depositor has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has full
power and authority to sell and assign the property to be sold and
assigned to and deposited with the Owner Trustee on behalf of the Trust as
part of the Trust Estate and has duly authorized such sale and assignment
and deposit with the Owner Trustee on behalf of the Trust by all necessary
corporate action; and the execution, delivery and performance of this
Agreement have been duly authorized by the Depositor by all necessary
corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in the breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Depositor, or any indenture, agreement or
other instrument to which the Depositor is a party or by which it is
bound; nor result in the creation or imposition of any Lien upon any of
the properties of the Depositor pursuant to the terms of any such
indenture, agreement or other instrument (other than pursuant to the Basic
Documents); nor violate any law or any order, rule or regulation
applicable to the Depositor of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(v) There are no proceedings or investigations pending, or to the
Depositor's best knowledge threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (A) asserting the
invalidity of this Agreement, any of the other Basic Documents or the
Trust Certificates, (B) seeking to prevent the issuance of the Trust
Certificates or the consummation of any of the transactions contemplated
by this Agreement or any of the other Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement, any of the other
8
<PAGE> 14
Basic Documents or the Trust Certificates or (D) involving the Depositor
and which might adversely affect the federal income tax or other federal,
state or local tax attributes of the Trust Certificates.
(b) The Company hereby represents and warrants to the Owner Trustee and
the Insurer that:
(i) The Company is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws of
the State of California, with power and authority to own its properties
and to conduct its business and had at all relevant times, and has, power,
authority and legal right to acquire and own the Contracts.
(ii) The Company is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business requires such qualifications.
(iii) The Company has the power and authority to execute and deliver
this Agreement and to carry out its terms; and the execution, delivery and
performance of this Agreement have been duly authorized by the Company by
all necessary corporate action.
(iv) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Company, or any indenture, agreement or
other instrument to which the Company is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of the
properties of the Company pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the Basic
Documents); nor violate any law or any order, rule or regulation
applicable to the Company of any court or of any federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Company or its properties.
(v) There are no proceedings or investigations pending, or to the
Company's best knowledge threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Company or its properties: (A) asserting the
invalidity of this Agreement, any of the other Basic Documents or the
Trust Certificates, (B) seeking to prevent the issuance of the Trust
Certificates or the consummation of any of the transactions contemplated
by this Agreement or any of the other Basic Documents, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Company of its obligations under, or the validity or
enforceability of, this Agreement, any of the other Basic Documents or the
Trust Certificates or (D) involving the Company and which might adversely
affect the federal income tax or other federal, state or local tax
attributes of the Trust Certificates.
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Section 2.10. Federal Income Tax Allocations.
(a) Net income of the Trust for any calendar quarter as determined for
federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated:
(i) among the Certificate Owners as of the first day following the
end of such quarter, in proportion to their ownership of the principal
amount of Trust Certificates on such date, net income in an amount up to
the sum of (A) the Certificate Interest Distributable Amount for such
quarter, (B) interest on the excess, if any, of the Certificate Interest
Distributable Amount for the preceding Distribution Date over the amount
in respect of interest that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, to the extent
permitted by law, at the Pass-Through Rate from such preceding
Distribution Date through the current Distribution Date, (C) the portion
of the market discount on the Contracts accrued during such quarter that
is allocable to the excess, if any, of the initial aggregate principal
amount of the Trust Certificates over their initial aggregate issue price
and (D) any other amounts of income payable to the Certificateholders for
such quarter; such sum to be reduced by any amortization by the Trust of
premium on Contracts that corresponds to any excess of the issue price of
Trust Certificates over their principal amount; and
(ii) to the Depositor and the Company in the proportion of 99% and
1%, respectively, to the extent of any remaining net income.
(b) If the net income of the Trust for any calendar quarter is
insufficient for the allocations described in Section 2.10(a)(i), subsequent net
income shall first be allocated to make up such shortfall before being allocated
as provided in Section 2.11(a)(ii). Net losses of the Trust, if any, for any
calendar quarter as determined for federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof) shall be
allocated to the Depositor and the Company in the proportion of 99% and 1%,
respectively, to the extent the Depositor and the Company are reasonably
expected to bear the economic burden of such net losses, and any remaining net
losses shall be allocated among the Certificate Owners as of the first day
following the end of such quarter in proportion to their ownership of the
principal amount of Trust Certificates on such day. The Depositor and the
Company are authorized to modify the allocations in this paragraph if necessary
or appropriate, in its sole discretion, for the allocations to fairly reflect
the income, gain, loss and deduction to the Depositor and the Company or to the
Certificate Owners, or as otherwise required by the Code.
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ARTICLE THREE
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01. Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.05 and until the issuance of
the Trust Certificates, the Depositor shall be the sole beneficiary of the
Trust.
Section 3.02. The Trust Certificates. The Trust Certificates shall be
substantially in the form of Exhibit C hereto. The Trust Certificates shall be
issuable in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof; provided, however, that the Trust Certificates issued to the
Company pursuant to Section 3.11 may be issued in such denomination as required
to include any residual amount. The Trust Certificates shall be executed by the
Owner Trustee on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Owner Trustee and attested on behalf of the Owner
Trustee by the manual or facsimile signature of an authorized officer of the
Owner Trustee and shall be deemed to have been validly issued when so executed.
Trust Certificates bearing the manual or facsimile signatures of individuals who
were, at the time when such signatures were affixed, authorized to sign on
behalf of the Owner Trustee shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them have ceased to be so
authorized prior to the authentication and delivery of such Trust Certificates
or did not hold such offices at the date of such Trust Certificates. All Trust
Certificates shall be dated the date of their authentication.
Section 3.03. Authentication and Delivery of Trust Certificates. The Owner
Trustee shall cause to be authenticated and delivered upon the order of the
Depositor, in exchange for the Contracts and the other assets of the Trust,
simultaneously with the sale, assignment and transfer to the Trust of the
Contracts, and the constructive delivery to the Owner Trustee of the Contract
Files and the other assets of the Trust, Trust Certificates duly authenticated
by the Owner Trustee, in authorized denominations equaling in the aggregate the
Original Certificate Balance evidencing the entire ownership of the Trust and
Notes issued by the Owner Trustee and authenticated by the Indenture Trustee in
aggregate principal amount of, in the case of the (i) Class A-1 Notes,
$224,100,000, (ii) Class A-2 Notes, $149,425,000 and (iii) Class A-3 Notes,
$73,975,000 No Trust Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Trust
Certificate a certificate of authentication substantially in the form set forth
in the form of Trust Certificate attached hereto as Exhibit C, executed by the
Owner Trustee or its authenticating agent, by manual signature, and such
certificate upon any Trust Certificate shall be conclusive evidence, and the
only evidence, that such Trust Certificate has been duly authenticated and
delivered hereunder. The provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall
apply to any authenticating agent hereunder. Upon issuance, authentication and
delivery pursuant to the terms hereof, the Trust Certificates will be entitled
to the benefits of this Agreement.
Section 3.04. Registration of Transfer and Exchange of Trust Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, a
Certificate Register, subject to such reasonable regulations as it may
prescribe. The Certificate Register shall provide for the registration of Trust
Certificates and transfers and exchanges of Trust Certificates as
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provided herein. The Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New
York, New York 10001, Attention: Structured Finance Services (ABS) as agent for
the Owner Trustee, is hereby initially appointed Certificate Registrar for the
purpose of registering Trust Certificates and transfers and exchanges of Trust
Certificates as herein provided. In the event that, subsequent to the Closing
Date, the Owner Trustee notifies the Master Servicer that The Chase Manhattan
Bank is unable to act as Certificate Registrar, the Master Servicer shall
appoint another bank or trust company, having an office or agency located in The
City of New York, agreeing to act in accordance with the provisions of this
Agreement applicable to it, and otherwise acceptable to the Owner Trustee, to
act as successor Certificate Registrar hereunder. The provisions of Sections
7.01, 7.03, 7.04 and 8.01 shall apply to any Certificate Registrar hereunder.
(b) Upon surrender for registration of transfer of any Trust Certificate
at the office of the Certificate Registrar, the Owner Trustee shall execute,
authenticate and deliver (or shall cause its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Trust Certificates in authorized denominations of a
like aggregate principal amount.
(c) At the option of a Certificateholder, Trust Certificates may be
exchanged for other Trust Certificates in authorized denominations of a like
aggregate principal amount, upon surrender of the Trust Certificates to be
exchanged at the office of the Certificate Registrar. Whenever any Trust
Certificates are so surrendered for exchange, the Owner Trustee on behalf of the
Trust shall execute, authenticate and deliver (or shall cause its authenticating
agent to authenticate and deliver) the Trust Certificates that the
Certificateholder making the exchange is entitled to receive. Every Trust
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Owner Trustee and the Certificate Registrar duly executed by the Holder
thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Owner Trustee may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Trust Certificates.
(e) The Trust Certificates may not be acquired by or for the account of a
Benefit Plan. By accepting and holding a Trust Certificate or a beneficial
interest therein, the Holder or any Certificate Owner thereof shall be deemed to
have represented and warranted that it is not a Benefit Plan nor will it hold
such Trust Certificate or a beneficial interest therein for the account of a
Benefit Plan.
(f) All Trust Certificates surrendered for registration of transfer or
exchange, if surrendered to the Company or any agent of the Owner Trustee or the
Company under this Agreement, shall be delivered to the Owner Trustee and
promptly cancelled by it, or, if surrendered to the Owner Trustee, shall be
promptly cancelled by it, and no Trust Certificates shall be issued in lieu
thereof except as expressly permitted by any of the provisions of this
Agreement. The Owner Trustee shall dispose of cancelled Trust Certificates in
accordance with the normal industry practice.
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Section 3.05. Mutilated, Destroyed, Lost or Stolen Trust Certificates. If
(i) any mutilated Trust Certificate is surrendered to the Certificate Registrar,
or the Certificate Registrar receives evidence to its satisfaction of the
destruction, loss or theft of any Trust Certificate, and (ii) there is delivered
to the Certificate Registrar and the Owner Trustee such security or indemnity as
may be required by them to save each of them harmless, then, in the absence of
notice that such Trust Certificate has been acquired by a protected purchaser,
the Owner Trustee on behalf of the Trust shall execute and the Owner Trustee or
its authenticating agent shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Trust Certificate, a new
Trust Certificate of like tenor and fractional undivided interest. In connection
with the issuance of any new Trust Certificate under this Section, the Owner
Trustee may require the payment by the Holder of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto. Any
duplicate Trust Certificate issued pursuant to this Section shall constitute
complete and indefeasible evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Certificate shall be
found at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a Trust
Certificate for registration of transfer, the Owner Trustee, the Certificate
Registrar, any Paying Agent and any of their respective agents may treat the
Person in whose name any Trust Certificate is registered as the owner of such
Trust Certificate for the purpose of receiving distributions pursuant to Section
5.02 and for all other purposes whatsoever, and none of the Owner Trustee, the
Certificate Registrar, any Paying Agent or any of their respective agents shall
be affected by any notice to the contrary.
Section 3.07. Access to List of Certificateholders' Names and Addresses.
The Owner Trustee shall furnish or cause to be furnished to the Master Servicer,
the Insurer and the Depositor, within 15 days after receipt by the Certificate
Registrar of a written request therefor from the Master Servicer, the Insurer or
the Depositor, a list, in such form as the Master Servicer or the Depositor may
reasonably require, of the names and addresses of the Certificateholders as of
the most recent Record Date. If three or more Certificateholders, or one or more
Holders of Trust Certificates evidencing not less than 25% of the percentage
interests of the Trust Certificates (hereinafter referred to as "Applicants"),
apply in writing to the Owner Trustee, and such application states that the
Applicants desire to communicate with other Certificateholders with respect to
their rights hereunder or under the Trust Certificates and such application is
accompanied by a copy of the communication that such Applicants propose to
transmit, then the Owner Trustee shall, within five Business Days after the
receipt of such application, afford such Applicants access, during normal
business hours, to the current list of Certificateholders. Every
Certificateholder, by receiving and holding a Trust Certificate, agrees with the
Master Servicer, the Depositor and the Owner Trustee that none of the Master
Servicer, the Depositor or the Owner Trustee shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.
Section 3.08. Maintenance of Office or Agency. The Chase Manhattan Bank,
as agent for the Owner Trustee, shall maintain in the Borough of Manhattan, The
City of New York, an office or offices or agency or agencies where Trust
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Owner Trustee in respect of the Trust
Certificates and the Basic Documents may be served. The Owner Trustee
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hereby designates the office of The Chase Manhattan Bank at the address provided
under the definition of the term "Owner Trustee Corporate Trust Office" as its
office for such purposes. The Owner Trustee shall give prompt written notice to
the Depositor, the Master Servicer and to Certificateholders of any change in
the location of the Certificate Register or any such office or agency.
Section 3.09. Temporary Trust Certificates. Pending the preparation of
definitive Trust Certificates, the Owner Trustee, on behalf of the Trust, may
execute, authenticate and deliver, temporary Trust Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Trust
Certificates in lieu of which they are issued. If temporary Trust Certificates
are issued, the Depositor will cause definitive Trust Certificates to be
prepared without unreasonable delay. After the preparation of definitive Trust
Certificates, the temporary Trust Certificates shall be exchangeable for
definitive Trust Certificates upon surrender of the temporary Trust Certificates
at the office or agency to be maintained as provided in Section 3.08, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Trust Certificates, the Owner Trustee shall execute and authenticate
and deliver in exchange therefor a like principal amount of definitive Trust
Certificates in authorized denominations. Until so exchanged, the temporary
Trust Certificates shall in all respects be entitled to the same benefits
hereunder as definitive Trust Certificates.
Section 3.10. Appointment of Paying Agent. The Paying Agent shall make
distributions to Certificateholders from the Certificate Distribution Account
pursuant to Section 5.02(a) and shall report the amounts of such distributions
to the Owner Trustee. Any Paying Agent shall have the revocable power to
withdraw funds from the Certificate Distribution Account for the purpose of
making the distributions referred to above. The Owner Trustee may revoke such
power and remove the Paying Agent if the Owner Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under this Agreement in any material respect. The Paying Agent initially shall
be The Chase Manhattan Bank and any co-paying agent chosen by the Paying Agent
that is acceptable to the Owner Trustee. Each Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Owner Trustee. In the
event that The Chase Manhattan Bank shall no longer be the Paying Agent, the
Owner Trustee shall appoint a successor to act as Paying Agent (which shall be a
bank or trust company). The Owner Trustee shall cause such successor Paying
Agent or any additional Paying Agent appointed by the Owner Trustee to execute
and deliver to the Owner Trustee an instrument in which such successor Paying
Agent or additional Paying Agent shall agree with the Owner Trustee that, as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Certificateholders in trust for
the benefit of the Certificateholders entitled thereto until such sums shall be
paid to such Certificateholders. The Paying Agent shall return all unclaimed
funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent
shall also return all funds in its possession to the Owner Trustee. The
provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Owner
Trustee also in its role as Paying Agent, for so long as the Owner Trustee shall
act as Paying Agent and, to the extent applicable, to any other paying agent
appointed hereunder. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise. If the long
term debt rating of the Paying Agent shall not be at least Baa3 from
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Moody's and BBB- from Standard & Poor's, the Rating Agencies shall be given
notice of such lower long term debt rating.
Section 3.11. Ownership by the Company of Trust Certificates. The Company
shall on the Closing Date purchase from the Underwriters Trust Certificates
representing at least 1% of the Original Certificate Balance and shall
thereafter retain beneficial and record ownership of Trust Certificates
representing at least 1% of the Certificate Balance. Any attempted transfer of
any Trust Certificate that would reduce such interest of the Company below 1% of
the Certificate Balance shall be void. The Owner Trustee shall cause any Trust
Certificate issued to the Company on the Closing Date (and any Trust Certificate
issued in exchange therefor) to contain a legend stating "THIS TRUST CERTIFICATE
IS NON-TRANSFERABLE".
Section 3.12. Book-Entry Certificates. The Trust Certificates upon
original issuance will be issued in the form of one or more typewritten
certificates representing the Book-Entry Trust Certificates, to be delivered to
DTC, the initial Clearing Agency, by, or on behalf of, the Trust; provided,
however, that one Definitive Trust Certificate (as defined below) may be issued
to the Company pursuant to Section 3.11. The certificate or certificates
delivered to DTC evidencing such Trust Certificates shall initially be
registered on the Certificate Register in the name of CEDE & CO., the nominee of
the initial Clearing Agency, and no Certificate Owner (other than the Company)
will receive a definitive certificate representing such Certificate Owner's
interest in the Trust Certificates, except as provided in Section 3.14. Unless
and until definitive, fully registered Trust Certificates (the "Definitive Trust
Certificates") have been issued to Certificate Owners pursuant to Section 3.14:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Depositor, the Master Servicer, the Certificate Registrar
and the Owner Trustee, subject to the provisions and limitations of
Sections 2.03 and 2.06, may deal with the Clearing Agency for all purposes
(including the making of distributions on the Trust Certificates) as the
authorized representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency (or through procedures established by the
Clearing Agency) and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants; pursuant to the Certificate Depository
Agreement, unless and until Definitive Trust Certificates are issued
pursuant to Section 3.14, the Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distributions of principal and interest on the Trust Certificates to such
Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Holders of Trust Certificates
evidencing a specified percentage of the percentage interests thereof, the
Clearing Agency shall be deemed to represent such percentage only to the
extent that it has received instructions to such effect
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from Certificate Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in Trust Certificates and has delivered such instructions to the
Owner Trustee.
Section 3.13. Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required hereunder, unless and until
Definitive Trust Certificates shall have been issued to Certificate Owners
pursuant to Section 3.14, the Owner Trustee and the Master Servicer shall give
all such notices and communications specified herein to be given to Holders of
the Trust Certificates to the Clearing Agency.
Section 3.14. Definitive Trust Certificates. If (i)(A) the Administrator
advises the Owner Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities as described in the
Certificate Depository Agreement and (B) the Trustee or the Administrator is
unable to locate a qualified successor, (ii) the Administrator, at its option,
advises the Owner Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency, or (iii) after the occurrence of an Event of
Default or a Servicer Default, Certificate Owners representing beneficial
interests aggregating not less than 51% of the Certificate Balance advise the
Owner Trustee and the Clearing Agency through the Clearing Agency Participants
in writing that the continuation of a book-entry system through the Clearing
Agency is no longer in the best interests of the Certificate Owners, then the
Clearing Agency shall notify all Certificate Owners and the Owner Trustee of the
occurrence of any such event and of the availability of Definitive Trust
Certificates to Certificate Owners requesting the same. Upon surrender to the
Owner Trustee by the Clearing Agency of the certificates evidencing the
Book-Entry Trust Certificates, accompanied by registration instructions from the
Clearing Agency for registration, the Owner Trustee shall issue the Definitive
Trust Certificates and deliver such Definitive Trust Certificates in accordance
with the instructions of the Clearing Agency. Neither the Depositor, the
Certificate Registrar nor the Owner Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Trust Certificates, the Owner Trustee shall recognize the Holders of the
Definitive Trust Certificates as Certificateholders hereunder. The Owner Trustee
shall not be liable if the Owner Trustee or the Administrator is unable to
locate a qualified successor Clearing Agency. The Definitive Trust Certificates
shall be printed, lithographed or engraved or may be produced in any manner as
is reasonably acceptable to the Owner Trustee, as evidenced by its execution
thereof.
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ARTICLE FOUR
ACTIONS BY OWNER TRUSTEE
Section 4.01. Prior Notice to Owners with Respect to Certain Matters.
Subject to the provisions and limitations of Section 4.04, with respect to the
following matters, the Owner Trustee shall not take action unless at least 30
days before the taking of such action, the Owner Trustee shall have notified the
Certificateholders in writing of the proposed action and the Holders of Trust
Certificates evidencing at least a majority of the Certificate Balance shall not
have notified the Owner Trustee in writing prior to the 30th day after such
notice is given that such Holders have withheld consent or provided alternative
direction:
(a) the initiation of any claim or lawsuit by the Trust (except
claims or lawsuits brought in connection with the collection of the
Contracts) and the compromise of any action, claim or lawsuit brought by
or against the Trust (except with respect to the aforementioned claims or
lawsuits for collection of the Contracts);
(b) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under
the Business Trust Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, paying agent for the Notes or Indenture Trustee or pursuant to
this Agreement of a successor Certificate Registrar, or the consent to the
assignment by the Note Registrar, Paying Agent, Indenture Trustee or
Certificate Registrar of its obligations under the Indenture or this
Agreement, as applicable.
Section 4.02. Action by Owners with Respect to Certain Matters. Subject to
the provisions and limitations of Section 4.04, the Owner Trustee shall not have
the power, except upon the direction of the Owners and with the prior written
consent of the Insurer (so long as no Insurer Default shall have occurred and be
continuing), to (a) remove the Administrator pursuant to Section 8 of the
Administration Agreement, (b) appoint a successor Administrator pursuant to
Section 8 of the Administration Agreement, (c) remove the Master Servicer
pursuant to Section 8.01 of the Sale and Servicing Agreement, (d) except as
expressly provided in the Basic Documents, sell the Contracts after the
termination of the Indenture, (e) initiate any claim, suit or proceeding by the
Trust or compromise any claim, suit or proceeding brought by or against the
Trust, (f) authorize the merger, consolidation or conversion of the Trust with
or into any other
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business trust or entity (other than in accordance with Section 3.10 of the
Indenture) or (g) amend the Certificate of Trust. The Owner Trustee shall take
the actions referred to in the preceding sentence only upon written instructions
signed by the Owners.
Section 4.03. Action by Owners with Respect to Bankruptcy. The Owner
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the prior written consent of the
Insurer and the unanimous prior approval of all Owners and the delivery to the
Owner Trustee by each such Owner of a certificate certifying that such Owner
reasonably believes that the Trust is insolvent.
Section 4.04. Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee to take or to refrain from taking any action if such action or
inaction would be contrary to any obligation of the Trust or the Owner Trustee
under this Agreement or any of the other Basic Documents or would be contrary to
the purpose of the Trust as set forth in Section 2.03, nor shall the Owner
Trustee be obligated to follow any such direction, if given.
Section 4.05. Majority Control. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance. Except as expressly provided herein, any written notice of
the Owners delivered pursuant to this Agreement shall be effective if signed by
Holders of Trust Certificates evidencing not less than a majority of the
Certificate Balance at the time of the delivery of such notice.
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ARTICLE FIVE
APPLICATION OF TRUST FUNDS;
CERTAIN DUTIES
Section 5.01. Establishment of Trust Account. The Owner Trustee, for the
benefit of the Certificateholders, shall establish and maintain in the name of
the Trust an Eligible Account (the "Certificate Distribution Account"), bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Certificateholders. The Certificate Distribution Account
initially shall be established with The Chase Manhattan Bank in the state of New
York.
The Owner Trustee shall possess all right, title and interest in funds on
deposit from time to time in the Certificate Distribution Account and in the
proceeds thereof. Except as otherwise expressly provided herein, the Certificate
Distribution Account shall be under the sole dominion and control of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, the
Certificate Distribution Account ceases to be an Eligible Account, the Owner
Trustee (or the Depositor on behalf of the Owner Trustee, if the Certificate
Distribution Account is not then held by the Owner Trustee or an Affiliate
thereof) shall within ten Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency or the Insurer must consent)
establish a new Certificate Distribution Account as an Eligible Account and
shall transfer any cash and/or any investments to such new Certificate
Distribution Account.
Section 5.02. Application of Trust Funds.
(a) On each Distribution Date, the Owner Trustee will distribute to
Certificateholders, on a pro rata basis, amounts deposited in the Certificate
Distribution Account pursuant to Sections 5.02 and 5.05 of the Sale and
Servicing Agreement with respect to such Distribution Date.
(b) On each Distribution Date, the Owner Trustee shall send to each
Certificateholder the statement or statements provided to the Owner Trustee by
the Master Servicer pursuant to Section 5.07 of the Sale and Servicing Agreement
with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Owner
Trustee is hereby authorized and directed to retain, or cause the Paying Agent
to retain, from amounts otherwise distributable to the Owners sufficient funds
for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Owner Trustee from contesting any such tax
in appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding tax
imposed with respect to an Owner shall be treated as cash distributed to such
Owner at the time it is withheld by the Trust and remitted to the appropriate
taxing authority. If there is a possibility that withholding tax is payable with
respect to a distribution, the Owner Trustee may in its sole discretion withhold
such amounts in accordance with this paragraph (c).
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Section 5.03. Method of Payment. Subject to Section 9.01(c) respecting the
final payment upon retirement of each Trust Certificate, distributions required
to be made to each Certificateholder of record on the related Record Date shall
be made by check mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register (or, if DTC, its nominee or a Clearing
Agency is the relevant Certificateholder, by wire transfer of immediately
available funds or pursuant to other arrangements), the amount to be distributed
to such Certificateholder pursuant to such Holder's Trust Certificates.
Section 5.04. No Segregation of Monies; No Interest. Subject to Sections
5.01 and 5.02, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be liable for any interest
thereon.
Section 5.05. Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others. The Owner Trustee shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis and the
accrual method of accounting, (b) deliver to each Owner, as may be required by
the Code and applicable Treasury Regulations, such information as may be
required (including Schedule K-1) to enable each Owner to prepare its federal
and state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, IRS Form 1065) and make such
elections as from time to time may be required or appropriate under any
applicable state or federal statute or any rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with Section 5.02(c) with respect to income or distributions to
Owners. The Owner Trustee shall elect under Section 1278 of the Code to include
in income currently any market discount that accrues with respect to the
Contracts. The Owner Trustee shall not make the election provided under Section
754 of the Code.
Section 5.06. Signature on Returns; Tax Matters Partner.
(a) The Company shall sign on behalf of the Trust the tax returns of the
Trust.
(b) The Company shall be designated the "tax matters partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
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ARTICLE SIX
AUTHORITY AND DUTIES OF OWNER TRUSTEE
Section 6.01. General Authority. Subject to the provisions and limitations
of Sections 2.03 and 2.06, the Owner Trustee is authorized and directed to
execute and deliver the Basic Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Trust is to be a party and any amendment or
other agreement, as evidenced conclusively by the Owner Trustee's execution
thereof. In addition to the foregoing, the Owner Trustee is authorized, but
shall not be obligated, to take all actions required of the Trust pursuant to
the Basic Documents. The Owner Trustee is further authorized from time to time
to take such action as the Administrator recommends with respect to the Basic
Documents.
Section 6.02. General Duties. Subject to the provisions and limitations of
Sections 2.03 and 2.06, it shall be the duty of the Owner Trustee to discharge
(or cause to be discharged through the Administrator or such agents as shall be
appointed with the consent of the Insurer) all of its responsibilities pursuant
to the terms of this Agreement and the other Basic Documents to which the Trust
is a party and to administer the Trust in the interest of the Owners, subject to
the Basic Documents and in accordance with the provisions of this Agreement.
Without limiting the foregoing, the Owner Trustee shall on behalf of the Trust
file and prove any claim or claims that may exist against the Company in
connection with any claims paying procedure as part of an insolvency or
receivership proceeding involving the Company. Notwithstanding the foregoing,
the Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the other Basic Documents to the extent the
Administrator has agreed in the Administration Agreement to perform any act or
to discharge any duty of the Owner Trustee hereunder or under any Basic
Document, regardless of whether the Administration Agreement is subsequently
terminated or rejected by the Administrator, and the Owner Trustee shall not be
held liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement.
Section 6.03. Action Upon Instruction.
(a) Subject to Article Four, in accordance with the terms of the Basic
Documents, the Insurer (so long as an Insurer Default shall not have occurred
and be continuing) or the Owners (if an Insurer Default shall have occurred and
be continuing) (the "Instructing Party") may by written instruction direct the
Owner Trustee in the management of the Trust. Such direction may be exercised at
any time by written instruction of the Instructing Party pursuant to Article
Four.
(b) The Owner Trustee shall not be required to take any action hereunder
or under any other Basic Document if the Owner Trustee shall have reasonably
determined, or shall have been advised by counsel, that such action is likely to
result in liability on the part of the Owner Trustee or is contrary to the terms
hereof or of any other Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between alternative
courses of action permitted or required by the terms of this Agreement or under
any other Basic Document,
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the Owner Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Instructing Party requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee acts in good faith in accordance with any written instruction of
the Instructing Party received, the Owner Trustee shall not be liable on account
of such action to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement and the other Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the application of
any provision of this Agreement or any other Basic Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to take
with respect to a particular set of facts, the Owner Trustee may give notice (in
such form as shall be appropriate under the circumstances) to the Instructing
Party requesting instruction and, to the extent that the Owner Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Owner Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Owner Trustee shall not have received
appropriate instruction within ten days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action not inconsistent with this Agreement or the other Basic
Documents, as it shall deem to be in the best interests of the Owners, and shall
have no liability to any Person for such action or inaction.
Section 6.04. No Duties Except as Specified in this Agreement or in
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Owner Trustee is a party, except as expressly provided by the terms
of this Agreement or in any document or written instruction received by the
Owner Trustee pursuant to Section 6.03; and no implied duties or obligations
shall be read into this Agreement or any other Basic Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for filing any financing
or continuation statement in any public office at any time or to otherwise
perfect or maintain the perfection of any security interest or lien granted to
it hereunder or to prepare or file any Commission filing for the Trust or to
record this Agreement or any other Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens (other than the lien of the
Indenture) on any part of the Trust Estate that result from actions by, or
claims against, the Owner Trustee that are not related to the ownership or the
administration of the Trust Estate.
Section 6.05. No Action Except Under Specified Documents or Instructions.
The Owner Trustee shall not manage, control, use, sell, dispose of or otherwise
deal with any part of the Trust Estate except in accordance with (i) the powers
granted to and the authority conferred upon
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the Owner Trustee pursuant to this Agreement, (ii) the other Basic Documents and
(iii) any document or instruction delivered to the Owner Trustee pursuant to
Section 6.03.
Section 6.06. Restrictions. The Owner Trustee shall not take any action
(i) that is inconsistent with the purposes of the Trust set forth in Section
2.03 or (ii) that, to the actual knowledge of a Responsible Officer in the Owner
Trustee Corporate Trust Office, would result in the Trust's becoming taxable as
a corporation for federal or state income tax purposes. The Owners shall not
direct the Owner Trustee to take action that would violate the provisions of
this Section.
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ARTICLE SEVEN
CONCERNING THE OWNER TRUSTEE
Section 7.01. Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement. The Owner
Trustee also agrees to disburse all monies actually received by it constituting
part of the Trust Estate upon the terms of this Agreement and the other Basic
Documents. The Owner Trustee shall not be answerable or accountable hereunder or
under any other Basic Document under any circumstances, except (i) for its own
willful misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.03 expressly made by the Owner
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(a) the Owner Trustee shall not be liable for any error of judgment
made by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in accordance with the instructions of
the Administrator or any Owner;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee to expend or risk funds or otherwise incur any
financial liability in the performance of any of its rights or powers
hereunder or under any other Basic Document if the Owner Trustee shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured or provided to it;
(d) under no circumstances shall the Owner Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes or the Trust
Certificates;
(e) the Owner Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof by the Depositor or the Insurer or for the form, character,
genuineness, sufficiency, value or validity of any of the Trust Estate, or
for or in respect of the validity or sufficiency of the Basic Documents,
other than the certificate of authentication on the Trust Certificates,
and the Owner Trustee shall in no event assume or incur any liability,
duty or obligation to any Noteholder or to any Owner, other than as
expressly provided for herein or expressly agreed to in the other Basic
Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, WFS Financial Auto Loans, Inc., as Seller
or Depositor, the Insurer, the Indenture Trustee or the Master Servicer
under any of the Basic Documents or otherwise and the Owner Trustee shall
have no obligation or liability to perform the obligations of the Trust
under this Agreement or the other Basic Documents that are required to be
performed by the Administrator under the Administration Agreement, the
Indenture
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Trustee under the Indenture or the Master Servicer or WFS Financial Auto
Loans, Inc. as Seller or Depositor under the Sale and Servicing Agreement;
and
(g) the Owner Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agreement or otherwise or in
relation to this Agreement or any other Basic Document, at the request,
order or direction of the Instructing Party, unless such Instructing Party
has offered to the Owner Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that may be incurred by the
Owner Trustee therein or thereby; the right of the Owner Trustee to
perform any discretionary act enumerated in this Agreement or in any other
Basic Document shall not be construed as a duty, and the Owner Trustee
shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
Section 7.02. Furnishing of Documents. The Owner Trustee shall furnish to
the Owners promptly upon receipt of a written request therefor, duplicates or
copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Basic Documents.
Section 7.03. Representations and Warranties. The Owner Trustee hereby
represents and warrants to the Depositor, the Owners and the Insurer that:
(a) It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will
contravene any federal or Delaware law, governmental rule or regulation
governing the banking or trust powers of the Owner Trustee or any judgment
or order binding on it, or constitute any default under its charter
documents or bylaws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound or result in the creation or imposition of any lien, charge or
encumbrance on the Trust Estate resulting from actions by or claims
against the Owner Trustee individually which are unrelated to this
Agreement or the other Basic Documents.
Section 7.04. Reliance; Advice of Counsel.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
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directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of determination of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the other
Basic Documents, the Owner Trustee (i) may act directly or through its agents or
attorneys pursuant to agreements entered into with any of them, and the Owner
Trustee shall not be liable for the conduct or misconduct of such agents or
attorneys if such agents or attorneys shall have been selected by the Owner
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Owner Trustee shall not be liable for anything done, suffered or omitted in
good faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any other Basic Document.
Section 7.05. Not Acting in Individual Capacity. Except as otherwise
provided in this Article Seven, in accepting the trusts hereby created, Chase
Manhattan Bank Delaware acts solely as Owner Trustee hereunder and not in its
individual capacity, and all Persons having any claim against the Owner Trustee
by reason of the transactions contemplated by this Agreement or any other Basic
Document shall look only to the Trust Estate for payment or satisfaction
thereof.
Section 7.06. Owner Trustee Not Liable for Trust Certificates, Notes or
Contracts. The recitals contained herein and in the Trust Certificates (other
than the signature of the Owner Trustee and the certificate of authentication on
the Trust Certificates) shall be taken as the statements of the Depositor, and
the Owner Trustee assumes no responsibility for the correctness thereof. The
Owner Trustee makes no representations as to the validity or sufficiency of this
Agreement, any other Basic Document or the Trust Certificates (other than the
signature of the Owner Trustee and the certificate of authentication on the
Trust Certificates and the representations and warranties in Section 7.03) or
the Notes, or of any Contract or related documents. The Owner Trustee shall at
no time have any responsibility or liability for or with respect to the
legality, validity and enforceability of any Contract, or the perfection and
priority of any security interest created by any Contract in any Financed
Vehicle or the maintenance of any such perfection and priority, or for or with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without limitation, the existence,
condition and ownership of any Financed Vehicle; the existence and
enforceability of any insurance thereon; the existence and contents of any
Contract on any computer or other record thereof; the validity of the assignment
of any Contract to the Trust or of any intervening assignment; the completeness
of any Contract; the performance or enforcement of any Contract; the compliance
by the Depositor, the Insurer or the Master Servicer with any warranty or
representation made under any Basic Document or in any related document or the
accuracy of any such warranty or
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representation; or any action of the Administrator, the Indenture Trustee or the
Master Servicer or any subservicer taken in the name of the Owner Trustee.
Section 7.07. Owner Trustee May Own Trust Certificates and Notes. The
Owner Trustee in its individual or any other capacity may become the owner or
pledgee of Trust Certificates or Notes and may deal with the Depositor, the
Insurer, the Administrator, the Indenture Trustee and the Master Servicer in
banking transactions with the same rights as it would have if it were not Owner
Trustee.
Section 7.08. Pennsylvania Motor Vehicle Sales Finance Act Licenses. The
Owner Trustee, in its individual capacity, shall use its best efforts to
maintain, and the Owner Trustee, as Owner Trustee, shall cause the Trust to use
its best efforts to maintain, the effectiveness of all licenses required under
the Pennsylvania Motor Vehicle Sales Finance Act in connection with this
Agreement and the other Basic Documents and the transactions contemplated hereby
and thereby until such time as the Trust shall terminate in accordance with the
terms hereof.
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ARTICLE EIGHT
COMPENSATION OF OWNER TRUSTEE
Section 8.01. Owner Trustee's Fees and Expenses. The Owner Trustee shall
receive as compensation for its services hereunder such fees as have been
separately agreed upon before the date hereof between the Depositor and the
Owner Trustee, and the Owner Trustee shall be entitled to be reimbursed by the
Depositor for its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder.
Section 8.02. Indemnification. The Company shall be liable as primary
obligor for, and shall indemnify the Owner Trustee and its successors, assigns,
agents and servants (collectively, the "Indemnified Parties") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "Expenses") which may at any time be imposed on, incurred by or
asserted against the Owner Trustee or any Indemnified Party in any way relating
to or arising out of this Agreement, the other Basic Documents, the Trust
Estate, the administration of the Trust Estate or the action or inaction of the
Owner Trustee hereunder, except only that the Company shall not be liable for or
required to indemnify an Indemnified Party from and against Expenses arising or
resulting from any of the matters described in the third sentence of Section
7.01. The indemnities contained in this Section shall survive the resignation or
termination of the Owner Trustee or the termination of this Agreement. In the
event of any claim, action or proceeding for which indemnity will be sought
pursuant to this Section, the Owner Trustee's choice of legal counsel shall be
subject to the approval of the Depositor, which approval shall not be
unreasonably withheld.
Section 8.03. Payments to the Owner Trustee. Any amounts paid to the Owner
Trustee pursuant to this Article shall be deemed not to be a part of the Trust
Estate immediately after such payment.
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ARTICLE NINE
TERMINATION OF TRUST AGREEMENT
Section 9.01. Termination of Trust Agreement.
(a) The Trust shall dissolve upon the final distribution by the Owner
Trustee of all monies or other property or proceeds of the Trust Estate in
accordance with the terms of the Indenture, the Sale and Servicing Agreement and
Article Five. The bankruptcy, liquidation, dissolution, death or incapacity of
any Owner shall not (i) operate to terminate this Agreement or the Trust, (ii)
entitle such Owner's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of all
or any part of the Trust or Trust Estate or (iii) otherwise affect the rights,
obligations and liabilities of the parties hereto. Notwithstanding the
foregoing, the obligation of the Owner Trustee to make draws upon the
Certificate Policy shall survive the dissolution of the Trust until the end of
any preference period associated with the payments previously made with respect
to the Trust Certificates or dissolution of the Trust.
(b) Except as provided in Section 9.01(a), neither the Depositor, the
Company, the Insurer nor any Owner shall be entitled to dissolve, revoke or
terminate the Trust.
(c) Notice of any dissolution of the Trust, specifying the Distribution
Date upon which Certificateholders shall surrender their Trust Certificates to
the Paying Agent for payment of the final distribution and cancellation, shall
be given by the Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of a termination notice from the Master Servicer given
pursuant to Section 9.01(c) of the Sale and Servicing Agreement and no later
than 20 days prior to such dissolution, stating (i) the Distribution Date upon
or with respect to which final payment of the Trust Certificates shall be made
upon presentation and surrender of the Trust Certificates at the office of the
Paying Agent in The City of New York therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Trust Certificates at the office of the Paying Agent
therein specified. The Owner Trustee shall give such notice to the Certificate
Registrar (if other than the Owner Trustee) and the Paying Agent at the time
such notice is given to Certificateholders. Upon presentation and surrender of
the Trust Certificates, the Paying Agent shall cause to be distributed to
Certificateholders amounts distributable on such Distribution Date pursuant to
Section 5.02. In addition, the Owner Trustee shall notify the Rating Agencies
upon the final payment of the Trust Certificates.
(d) In the event that all of the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Owner Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates, and the cost thereof shall be paid out of the funds and other
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assets that shall remain subject to this Agreement. Any funds remaining in the
Trust after exhaustion of such remedies at least 18 months after the date of
dissolution shall be distributed by the Owner Trustee to a charity designated by
the Master Servicer.
(e) Upon the winding up of the Trust and payment of its liabilities or
reasonable provision therefore in accordance with Section 3808 of the Business
Trust Statute, the Owner Trustee shall cause the Certificate of Trust to be
cancelled by filing a certificate of cancellation with the Secretary of State in
accordance with the provisions of Section 3810 of the Business Trust Statute and
this Agreement (other than Article Eight) and the Trust shall terminate.
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ARTICLE TEN
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 10.01. Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's and
A-1 by Standard & Poor's. If such corporation shall publish reports of condition
at least annually pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Owner Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section 10.02.
Section 10.02. Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Administrator and the Insurer. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee; provided that the Depositor shall have received written
confirmation from each Rating Agency that the proposed appointment will not
result in an increased capital charge to the Insurer by either Rating Agency. If
no successor Owner Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Owner Trustee or the Insurer may petition any court of competent
jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of Section 10.01 and shall fail to resign after written
request therefor by the Administrator, or if at any time the Owner Trustee shall
be legally unable to act, or shall be adjudged bankrupt or insolvent, or a
receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator, with the consent of the Insurer (so long as
an Insurer Default shall not have occurred and be continuing) may remove the
Owner Trustee. If the Administrator shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the Administrator shall
promptly appoint a successor Owner Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the outgoing Owner Trustee so
removed and one copy to the successor Owner Trustee, and shall pay all fees owed
to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each Rating Agency.
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Section 10.03. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, the Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective,
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall, upon payment of its fees and
expenses, deliver to the successor Owner Trustee all documents and statements
and monies held by it under this Agreement; and the Administrator and the
predecessor Owner Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all
Certificateholders, the Insurer, the Indenture Trustee, the Noteholders and each
Rating Agency. If the Administrator shall fail to mail such notice within ten
days after acceptance of such appointment by the successor Owner Trustee, the
successor Owner Trustee shall cause such notice to be mailed at the expense of
the Administrator.
Section 10.04. Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such corporation shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such merger or
consolidation to each Rating Agency.
Section 10.05. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any Financed Vehicle may at the time be located, the
Administrator and the Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one or more Persons
approved by the Administrator and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust or any part thereof and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner
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Trustee pursuant to Section 10.01, except that such co-trustee or successor
trustee shall have (or have a parent that has) a rating of at least Baa3 by
Moody's and A-1 by Standard & Poor's, and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust Estate or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Owner Trustee;
(b) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(c) the Administrator and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of or affording protection to, the Owner
Trustee. Each such instrument shall be filed with the Owner Trustee and a copy
thereof given to the Administrator and the Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the extent permitted by law, without the appointment of a new
or successor co-trustee or separate trustee.
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ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Supplements and Amendments.
(a) This Agreement may be amended by the Depositor, the Company and the
Owner Trustee, with the prior written consent of the Insurer (so long as an
Insurer Default shall not have occurred and be continuing), without the consent
of any of the Noteholders or the Certificateholders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement or to add any other
provisions with respect to matters or questions arising under this Agreement
that shall not be inconsistent with the provisions of this Agreement; provided,
however, that any such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Noteholder or
Certificateholder.
(b) This Agreement may also be amended from time to time with the prior
written consent of the Insurer (so long as an Insurer Default shall not have
occurred and be continuing) by the Depositor, the Company and the Owner Trustee,
with the consent of the Holders of Trust Certificates evidencing not less than
51% of the Certificate Balance (which consent of any Holder of a Note or Trust
Certificate given pursuant to this Section or pursuant to any other provision of
this Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Note or Trust Certificate, as the case may be, issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made thereon) and, if such amendment materially and
adversely affects the interests of the Noteholders, with the consent of Holders
(as such term is defined in the Indenture) of Notes evidencing not less than 51%
of the Outstanding Amount of the Notes, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement, or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall increase or
reduce in any manner the amount of, or accelerate or delay the timing of, (i)
collections of payments on Contracts or distributions that shall be required to
be made for the benefit of the Noteholders or the Certificateholders or any
Interest Rate or the Pass-Through Rate or (ii) reduce the aforesaid percentage
of the Outstanding Amount of the Notes and the Certificate Balance required to
consent to any such amendment, without the consent of the Insurer and the
Holders of all outstanding Notes and Trust Certificates.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent, together with a copy thereof, to the Indenture Trustee, the Insurer,
the Administrator and each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder. It shall not be necessary for
the consent of Certificateholders, Noteholders or the Indenture Trustee pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement or in any other Basic
Document) and of evidencing the
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authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(f) In connection with the execution of any amendment to this Agreement or
any other Basic Document to which the Issuer is a party and for which amendment
the Owner Trustee's consent is sought, the Owner Trustee shall be entitled to
receive and conclusively rely upon an Opinion of Counsel to the effect that such
amendment is authorized or permitted by the Basic Documents and that all
conditions precedent in the Basic Documents for the execution and delivery
thereof by the Issuer or the Owner Trustee, as the case may be, have been
satisfied. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment that affects the Owner Trustee's own rights, duties or immunities
under this Agreement or otherwise.
Section 11.02. No Legal Title to Trust Estate in Owners. The Owners shall
not have legal title to any part of the Trust Estate. The Owners shall be
entitled to receive distributions with respect to their undivided ownership
interest therein only in accordance with Articles Five and Nine. No transfer, by
operation of law or otherwise, of any right, title or interest of the Owners to
and in their ownership interest in the Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
Section 11.03. Limitations on Rights of Others. Except for Section 2.07,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Depositor, the Company, the Owners, the Administrator and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
Section 11.04. Notices. All demands, notices and communications under this
Agreement shall be in writing personally delivered or mailed by certified mail,
return receipt requested, and shall be deemed to have been duly given upon
receipt in the case of (a) the Owner Trustee, at the Owner Trustee Corporate
Trust Office; (b) the Depositor, at 23 Pasteur Road, Irvine, California 92618,
Attention: Legal Department; (c) the Company, at 23 Pasteur Road, Irvine,
California 92618, Attention: Legal Department; (d) the Insurer, at 350 Park
Avenue, New York, New York 10022, Attention: Surveillance Department, Telex No.:
(212) 688-3101, Confirmation: (212) 826-0100, Telecopy Nos.: (212) 339-3518,
(212) 339-3529 (in each case in which notice or other communication to Financial
Security refers to an Event of Default, a claim on the Certificate Policy or the
Note Policy or with respect to which failure on the part of Financial Security
to respond shall be deemed to constitute consent or acceptance, then a copy of
such other notice or other communication should also be sent to the attention of
the General Counsel and the Head -- Financial Guaranty Group "URGENT MATERIAL
ENCLOSED"); (e) the Certificate Registrar or the agent for the Owner Trustee, at
the address indicated under the definition of "Owner Trustee Corporate Trust
Office"; or (f) as to each party, at such other address as shall be designated
by such party in a written notice to each other party. Any notice required or
35
<PAGE> 41
permitted to be mailed to a Certificateholder shall be given by first-class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
Section 11.05. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Trust
Certificates or the rights of the Holders thereof.
Section 11.06. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor, the Company, the Insurer, the Owner Trustee and their respective
successors and permitted assigns and each Owner and its successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by an Owner shall bind the successors and assigns
of such Owner.
Section 11.08. No Petition.
(a) The Depositor will not at any time institute against the Trust or the
Company any bankruptcy proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Trust Certificates, the Notes, this Agreement or any of the other Basic
Documents.
(b) The Owner Trustee, by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Indenture Trustee
and each Noteholder, by accepting the benefits of this Agreement, hereby
covenant and agree that they will not at any time institute against the Seller,
the Depositor, the Company or the Trust, or join in any institution against the
Seller, the Depositor, the Company or the Trust of, any bankruptcy proceedings
under any United States federal or state bankruptcy or similar law in connection
with any obligations relating to the Trust Certificates, the Notes, this
Agreement or any of the other Basic Documents.
(c) The Company will not at any time institute against the Trust, the
Seller or the Depositor any bankruptcy proceedings under any United States
federal or state bankruptcy or similar law in connection with any obligations
relating to the Trust Certificates, the Notes, the Agreement or any of the other
Basic Documents.
Section 11.09. No Recourse. Each Certificateholder by accepting a Trust
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositor, the Company, the Master Servicer, the
Seller, the Administrator, the Owner Trustee, the Indenture Trustee or any of
their respective Affiliates and no recourse may be had against such parties or
their assets,
36
<PAGE> 42
except as may be expressly set forth or contemplated in this Agreement, the
Trust Certificates or the other Basic Documents.
Section 11.10. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof pursuant to Section 3.03, the Certificates shall be
deemed fully paid.
Section 11.11. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 11.12. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13. Depositor Payment Obligation. The Depositor shall be
responsible for payment of the Administrator's compensation pursuant to Section
3 of the Administration Agreement and shall reimburse the Administrator for all
expenses and liabilities of the Administrator incurred thereunder.
Section 11.14. Insurer Default or Insolvency. If a default under the Note
Policy or the Certificate Policy has occurred and is continuing or a Insurer
Insolvency has occurred, any provision of this Agreement or any other Basic
Document giving the Insurer the right to direct, appoint or consent to, approve
of, or take any action under this Agreement, shall be inoperative during the
period of such default or the period from and after such Insurer Insolvency and
such consent or approval shall be deemed to have been given for the purpose of
such provisions.
37
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the
day and year first above written.
WFS FINANCIAL AUTO LOANS, INC., as
Depositor
By:_______________________________________
Name:
Title:
WFS INVESTMENTS, INC.
By:_______________________________________
Name:
Title:
FINANCIAL SECURITY ASSURANCE INC.
By:_______________________________________
Name:
Title:
CHASE MANHATTAN BANK DELAWARE,
as Owner Trustee
By:_______________________________________
Name:
Title:
<PAGE> 44
EXHIBIT A
FORM OF CERTIFICATE DEPOSITORY AGREEMENT
A-1
<PAGE> 45
EXHIBIT B
CERTIFICATE OF TRUST OF
WFS FINANCIAL 1999-C OWNER TRUST
This Certificate of Trust of WFS Financial 1999-C Owner Trust (the
"Trust"), dated as of October __, 1999, is being duly executed and filed by
Chase Manhattan Bank Delaware, a Delaware corporation, as trustee, to form a
business trust under the Delaware Business Trust Act (12 Del. Code, Section 3801
et seq.).
1. Name. The name of the business trust formed hereby is WFS Financial
1999-C Owner Trust.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Chase Manhattan Bank Delaware, 1201 Market
Street, Wilmington, Delaware 19801, Attention: Corporate Trust Administration
Department.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the Trust,
has executed this Certificate of Trust as of the date first above written.
CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:__________________________________
Name:
Title:
B-1
<PAGE> 46
EXHIBIT C
THIS TRUST CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE NOTES TO
THE EXTENT DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
UNLESS THIS TRUST CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER
OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY TRUST
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[TO BE INSERTED ON COMPANY CERTIFICATE --
THIS TRUST CERTIFICATE IS NON-TRANSFERABLE]
WFS FINANCIAL 1999-C OWNER TRUST
______% AUTO RECEIVABLE BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as
defined below, the property of which includes, among other things, (i)
a pool of retail installment sale contracts secured by new and used
automobiles and light duty trucks sold to the Trust by WFS Financial
Auto Loans, Inc. and (ii) a Financial Guaranty Insurance Policy issued
by Financial Security Assurance Inc. (the "Certificate Policy"). The
Certificate Final Distribution Date is _____, 200_.
(This Trust Certificate does not represent an interest in or obligation of
WFS Financial Auto Loans, Inc., WFS Financial Inc, WFS Investments, Inc. or any
of their respective affiliates, and is not a deposit and is not insured by the
Federal Deposit Insurance Corporation.)
Full and complete payment of the Certificate Distributable Amount on each
Distribution Date is unconditionally and irrevocably guaranteed pursuant to the
Certificate Policy.
NUMBER C-1 $51,975,000
CUSIP NO. _____________
THIS CERTIFIES THAT Cede & Co. is the registered owner of a Fifty One
Million Nine Hundred Seventy Five Thousand Dollar ($51,975,000) nonassessable,
fully-paid, fractional undivided interest in the WFS Financial 1999-C Owner
Trust (the "Trust") formed by WFS Financial Auto Loans, Inc., a California
corporation (the "Depositor").
C-1
<PAGE> 47
The Trust was created pursuant to a Trust Agreement, dated as of October
__, 1999, as amended and restated as of November 3, 1999 (as amended and
supplemented from time to time, the "Trust Agreement"), among WFS Financial Auto
Loans, Inc. (the "Depositor"), WFS Investments, Inc. (the "Company"), Financial
Security Assurance Inc. (the "Insurer") and Chase Manhattan Bank Delaware, as
owner trustee (the "Owner Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. Capitalized terms used herein that are
not otherwise defined shall have the meanings ascribed thereto in the Trust
Agreement.
This Trust Certificate is one of the duly authorized Trust Certificates
designated as "_________% Auto Receivable Backed Certificates" (the "Trust
Certificates"). Issued under the Indenture, dated as of October 1, 1999 (the
"Indenture"), between the Trust and Bankers Trust Company as Indenture Trustee,
are four classes of Notes designated as "________% Auto Receivable Backed Notes,
Class A-1", "_________% Auto Receivable Backed Notes, Class A-2" and "_________%
Auto Receivable Backed Notes, Class A-3" (collectively, the "Notes"). This Trust
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Holder of this
Trust Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound. The property of the Trust includes, among other things, (i) a
pool of retail installment sale contracts (the "Contracts") for new and used
automobiles and light duty trucks (the "Financed Vehicles") and (ii) the
Certificate Policy.
Under the Trust Agreement, there will be distributed on each January 20,
April 20, July 20 and October 20, of each year or, if any such day is not a
Business Day, the next succeeding Business Day (each, a "Distribution Date"),
commencing on January 20, 2000 and ending no later than __________ 20, 200_ to
the person in whose name this Trust Certificate is registered at the close of
business on the last calendar day immediately preceding the related Distribution
Date or, if Definitive Trust Certificates are issued, the 15th day of the
immediately preceding calendar month (each, a "Record Date"), such
Certificateholder's fractional undivided interest in the amount to be
distributed to Certificateholders on such Distribution Date.
The holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate are
subordinated to the rights of the Noteholders to the extent described in the
Sale and Servicing Agreement and the Indenture.
It is the intent of the Seller, the Master Servicer, the Company and the
Certificateholders that, for purposes of federal income, state and local income
and single business tax and any other income taxes, the Trust will be treated as
a partnership and the Certificateholders (including the Company) will be treated
as partners in that partnership. The Company and the other Certificateholders,
by acceptance of a Trust Certificate, agree to treat, and to take no action
inconsistent with the treatment of, the Trust Certificates for such tax purposes
as partnership interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a Trust
Certificate or, in the case of a Certificate Owner, a beneficial interest in a
Trust Certificate, covenants and agrees that such Certificateholder or
Certificate Owner, as the case may be, will not at any time institute against
the Trust, the Seller, the Depositor or the Company, or join in any institution
against the Trust, the Seller, the Depositor or the Company of, any bankruptcy,
reorganization, arrangement,
C-2
<PAGE> 48
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Notes, the Trust Agreement
or any of the other Basic Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Owner Trustee by wire transfer or check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Trust Certificate or the making of any notation hereon,
except that with respect to Trust Certificates registered on the Record Date in
the name of the nominee of the Clearing Agency (initially, such nominee to be
Cede & Co.), payments will be made by wire transfer in immediately available
funds to the account designated by such nominee. Except as otherwise provided in
the Trust Agreement and notwithstanding the above, the final distribution on
this Trust Certificate will be made after due notice by the Owner Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Trust Certificate at the office of the Paying Agent or the office or agency
maintained for that purpose by the Owner Trustee in The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed
by an authorized officer of the Owner Trustee, by manual signature, this Trust
Certificate shall not entitle the holder hereof to any benefit under the Trust
Agreement or any other Basic Document or be valid for any purpose.
THIS TRUST CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
C-3
<PAGE> 49
[REVERSE OF CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an interest
in, the Seller, the Depositor, the Company, the Master Servicer, the Owner
Trustee or any of their respective Affiliates and no recourse may be had against
such parties or their assets, except as expressly set forth or contemplated
herein or in the Trust Agreement or the other Basic Documents. In addition, this
Trust Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections and
recoveries with respect to the Contracts (and certain other amounts), and
amounts payable under the Certificate Policy, in each case as more specifically
set forth herein and in the Sale and Servicing Agreement. Copies of the Sale and
Servicing Agreement and the Trust Agreement may be examined by any
Certificateholder upon written request during normal business hours at the
principal office of the Depositor and at such other places, if any, designated
by the Depositor.
The Trust Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
parties thereto and the rights of the Certificateholders under the Trust
Agreement at any time by the parties thereto with the consent of Holders of
Trust Certificates evidencing not less than 51% of the Certificate Balance and,
if such amendment materially and adversely affects the interests of the
Noteholders, with the consent of Holders of Notes evidencing not less than 51%
of the Outstanding Amount of the Notes. Any such consent by the Holder of this
Trust Certificate shall be conclusive and binding on such Holder and on all
future Holders of this Trust Certificate and of any Trust Certificate issued
upon the transfer hereof or in exchange herefor or in lieu hereof, whether or
not notation of such consent is made upon this Trust Certificate. The Trust
Agreement also permits the amendment thereof, in certain limited circumstances,
without the consent of the Holders of any of the Trust Certificates or the
Notes.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of this Trust Certificate is registerable in the
Certificate Register upon surrender of this Trust Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
in The City of New York, accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee and the Certificate Registrar duly executed by
the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Trust Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee. The initial Certificate Registrar appointed under the
Trust Agreement is The Chase Manhattan Bank.
Except as provided in the Trust Agreement, the Trust Certificates are
issuable only as registered Trust Certificates without coupons in denominations
of $1,000 and in integral multiples of $1,000 in excess thereof. As provided in
the Trust Agreement and subject to certain limitations therein set forth, Trust
Certificates are exchangeable for new Trust Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Owner Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
C-4
<PAGE> 50
The Owner Trustee, the Certificate Registrar, the Paying Agent and any of
their respective agents may treat the Person in whose name this Trust
Certificate is registered as the owner hereof for all purposes, and none of the
Owner Trustee, the Certificate Registrar, the Paying Agent or any such agent
shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement and
the Sale and Servicing Agreement and the disposition of all property held as
part of the Trust Estate. The Seller may at its option purchase the Trust Estate
at a price specified in the Sale and Servicing Agreement, and such purchase of
the Contracts and other property of the Trust will effect early retirement of
the Trust Certificates; however, such right of purchase is exercisable only as
of any Distribution Date as of which the Aggregate Scheduled Balance is less
than or equal to 5% of the Cut-Off Date Aggregate Scheduled Balance.
The Trust Certificates may not be acquired by a Benefit Plan. By accepting
and holding this Trust Certificate, the Holder hereof or, in the case of
Book-Entry Trust Certificate, by accepting a beneficial interest in this Trust
Certificate, the related Certificate Owner, shall be deemed to have represented
and warranted that it is not a Benefit Plan and is not acquiring this Trust
Certificate or an interest therein for the account of a Benefit Plan.
C-5
<PAGE> 51
IN WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Trust Certificate to be duly executed.
Dated: November __, 1999 WFS FINANCIAL 1999-C OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE, not in its
individual capacity but solely as Owner
Trustee
By: __________________________________________
Authorized Signatory
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned
Trust Agreement.
THE CHASE MANHATTAN BANK, CHASE MANHATTAN BANK DELAWARE, not in its
as Authenticating Agent individual capacity but solely as Owner
Trustee
OR
By:______________________________ By:___________________________________
Authorized Signatory Authorized Signatory
C-6
<PAGE> 52
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________________
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:__________
Signature Guaranteed:
________________________________________ ____________________________________
NOTICE: Signature(s) must be guaranteed NOTICE: The signature to this
by an eligible guarantor institution. assignment must correspond with the
name of the registered owner as it
appears on the face of the within
Trust Certificate in every
particular, without alteration or
enlargement or any change whatever.
<PAGE> 1
EXHIBIT 4.2
================================================================================
WFS FINANCIAL 1999-C OWNER TRUST,
as Issuer,
and
BANKERS TRUST COMPANY,
as Trustee
------------------------------------
INDENTURE
Dated as of October 1, 1999
------------------------------------
$447,500,000
Auto Receivable Backed Notes
================================================================================
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions................................................................................... 2
Section 1.02. Incorporation by Reference of Trust Indenture Act............................................. 10
Section 1.03. Rules of Construction......................................................................... 11
ARTICLE TWO
THE NOTES
Section 2.01. Form.......................................................................................... 12
Section 2.02. Execution, Authentication and Delivery........................................................ 12
Section 2.03. Temporary Notes............................................................................... 12
Section 2.04. Registration; Registration of Transfer and Exchange........................................... 13
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes.................................................... 14
Section 2.06. Persons Deemed Owner.......................................................................... 15
Section 2.07. Payment of Principal and Interest; Defaulted Interest......................................... 15
Section 2.08. Cancellation.................................................................................. 16
Section 2.09. Book-Entry Notes.............................................................................. 17
Section 2.10. Notices to Clearing Agency.................................................................... 17
Section 2.11. Definitive Notes.............................................................................. 17
Section 2.12. Release of Collateral......................................................................... 18
Section 2.13. Tax Treatment................................................................................. 18
ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest............................................................. 19
Section 3.02. Maintenance of Office or Agency............................................................... 19
Section 3.03. Money for Payments to be Held in Trust........................................................ 19
Section 3.04. Existence..................................................................................... 21
Section 3.05. Protection of Trust Estate.................................................................... 21
Section 3.06. Opinions as to Trust Estate................................................................... 22
Section 3.07. Performance of Obligations; Servicing of Contracts............................................ 22
Section 3.08. Negative Covenants............................................................................ 24
Section 3.09. Annual Statement as to Compliance............................................................. 24
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Section 3.10. Issuer May Consolidate, etc................................................................... 25
Section 3.11. Successor or Transferee....................................................................... 27
Section 3.12. No Other Business............................................................................. 27
Section 3.13. No Borrowing.................................................................................. 27
Section 3.14. Master Servicer's Obligations................................................................. 27
Section 3.15. Guarantees, Loans, Advances and Other Liabilities............................................. 27
Section 3.16. Capital Expenditures.......................................................................... 28
Section 3.17. Restricted Payments........................................................................... 28
Section 3.18. Notice of Events of Default................................................................... 28
Section 3.19. Further Instruments and Acts.................................................................. 28
Section 3.20. Compliance with Laws.......................................................................... 28
Section 3.21. Amendments of Sale and Servicing Agreement and Trust Agreement................................ 28
Section 3.22. Removal of Administrator...................................................................... 28
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture....................................................... 29
Section 4.02. Application of Trust Money.................................................................... 30
Section 4.03. Repayment of Monies Held by Paying Agent...................................................... 30
ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default............................................................................. 31
Section 5.02. Rights upon Event of Default.................................................................. 32
Section 1.03. Collection of Indebtedness and Suits for Enforcement by Trustee; Authority of Controlling
Party.................................................................................... 33
Section 1.04. Remedies...................................................................................... 35
Section 1.05. Optional Preservation of the Contracts........................................................ 36
Section 1.06. Priorities.................................................................................... 36
Section 1.07. Limitation of Suits........................................................................... 37
Section 1.08. Unconditional Rights of Noteholders to Receive Principal and Interest......................... 38
Section 1.09. Restoration of Rights and Remedies............................................................ 38
Section 1.10. Rights and Remedies Cumulative................................................................ 38
Section 1.11. Delay or Omission Not a Waiver................................................................ 39
Section 1.12. Control by Noteholders........................................................................ 39
Section 1.13. Waiver of Past Defaults....................................................................... 39
Section 1.14. Undertaking for Costs......................................................................... 40
Section 1.15. Waiver of Stay or Extension Laws.............................................................. 40
Section 1.16. Action on Notes............................................................................... 40
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Section 1.17. Performance and Enforcement of Certain Obligations............................................ 40
Section 1.18. Claims Under Note Policy...................................................................... 41
Section 1.19. Preference Claims............................................................................. 42
ARTICLE SIX
THE TRUSTEE
Section 6.01. Duties of Trustee............................................................................. 44
Section 6.02. Rights of Trustee............................................................................. 45
Section 6.03. Individual Rights of Trustee.................................................................. 46
Section 6.04. Trustee's Disclaimer.......................................................................... 47
Section 6.05. Notice of Defaults............................................................................ 47
Section 6.06. Reports by Trustee to Holders................................................................. 47
Section 6.07. Compensation and Indemnity.................................................................... 47
Section 6.08. Replacement of Trustee........................................................................ 47
Section 6.09. Successor Trustee by Merger................................................................... 49
Section 6.10. Appointment of Co-Trustee or Separate Trustee................................................. 49
Section 6.11. Eligibility; Disqualification................................................................. 50
Section 6.12. Preferential Collection of Claims Against Issuer.............................................. 50
Section 6.13. Representations and Warranties of Trustee..................................................... 50
Section 6.14. Pennsylvania Motor Vehicle Sales Finance Act Licenses......................................... 51
ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Trustee Names and Addresses of Noteholders.................................. 52
Section 7.02. Preservation of Information; Communications to Noteholders.................................... 52
Section 7.03. Reports by Issuer............................................................................. 52
Section 7.04. Reports by Trustee............................................................................ 53
ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money........................................................................... 54
Section 8.02. Trust Accounts................................................................................ 54
Section 8.03. General Provisions Regarding Accounts......................................................... 55
Section 8.04. Release of Trust Estate....................................................................... 56
Section 8.05. Opinion of Counsel............................................................................ 56
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders........................................ 57
Section 9.02. Supplemental Indentures With Consent of Noteholders........................................... 58
Section 9.03. Execution of Supplemental Indentures.......................................................... 59
Section 9.04. Effect of Supplemental Indenture.............................................................. 59
Section 9.05. Conformity With Trust Indenture Act........................................................... 60
Section 9.06. Reference in Notes to Supplemental Indentures................................................. 60
ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption................................................................................... 61
Section 10.02. Form of Redemption Notice.................................................................... 61
Section 10.03. Notes Payable on Redemption Date............................................................. 62
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.................................................... 63
Section 11.02. Form of Documents Delivered to Trustee....................................................... 64
Section 11.03. Acts of Noteholders.......................................................................... 65
Section 11.04. Notices, etc................................................................................. 66
Section 11.05. Notices to Noteholders; Waiver............................................................... 67
Section 11.06. Alternate Payment and Notice Provisions...................................................... 67
Section 11.07. Conflict With Trust Indenture Act............................................................ 67
Section 11.08. Effect of Headings and Table of Contents..................................................... 68
Section 11.09. Successors and Assigns....................................................................... 68
Section 11.10. Separability................................................................................. 68
Section 11.11. Benefits of Indenture........................................................................ 68
Section 11.12. Legal Holidays............................................................................... 68
Section 11.13. Governing Law................................................................................ 68
Section 11.14. Counterparts................................................................................. 68
Section 11.15. Recording of Indenture....................................................................... 68
Section 11.16. Trust Obligation............................................................................. 69
Section 11.17. No Petition.................................................................................. 69
Section 11.18. Inspection................................................................................... 69
Section 11.19. Limitation of Liability of Owner Trustee..................................................... 69
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EXHIBITS
Schedule A - Schedule of Contracts.................................................................. SA-1
Exhibit A - Form of Sale and Servicing Agreement................................................... A-1
Exhibit B - Form of Depository Agreement........................................................... B-1
Exhibit C - Form of Class A-1 Note................................................................. C-1
Exhibit D - Form of Class A-2 Note................................................................. D-1
Exhibit E - Form of Class A-3 Note................................................................. E-1
Exhibit F - Form of Note Assignment................................................................ G-1
Exhibit G - Form of Note Policy.................................................................... H-1
</TABLE>
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<PAGE> 7
This Indenture, dated as of October 1, 1999, is among WFS Financial
1999-C Owner Trust, a Delaware business trust (the "Issuer"), and Bankers Trust
Company, a New York banking corporation, in its capacity as trustee (the
"Trustee") and not in its individual capacity.
Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the holders of the Issuer's _____% Auto
Receivable Backed Notes, Class A-1 (the "Class A-1 Notes"), _____% Auto
Receivable Backed Notes, Class A-2 (the "Class A-2 Notes"), _____% Auto
Receivable Backed Notes, Class A-3 (the "Class A-3 Notes" and together with the
Class A-1 Notes and the Class A-2 Notes, the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee on the Closing Date, on behalf
of and for the benefit of the Holders of the Notes, without recourse, all of the
Issuer's right, title and interest (exclusive of the amount, if any, allocable
to any rebatable insurance premium financed by any Contract) in, to and under
(i) the Contracts secured by the Financed Vehicles (which Contracts shall be
listed in the Schedule of Contracts); (ii) certain monies due under the
Contracts on and after October 1, 1999, including, without limitation, all
payments of Monthly P&I with respect to any Financed Vehicle to which a Contract
relates received on or after October 1, 1999 and all other proceeds received on
or in respect of such Contracts (other than payments of Monthly P&I due prior to
October 1, 1999; (iii) security interests in the Financed Vehicles; (iv) a
financial guaranty insurance policy to be issued by Financial Security for the
exclusive benefit of Noteholders, which will unconditionally and irrevocably
guarantee payment of the Scheduled Payments on each Distribution Date; (v)
amounts on deposit in the Collection Account, the Note Distribution Account, the
Spread Account and the Holding Account, including all Eligible Investments
therein and all income from the investment of funds therein and all proceeds
therefrom; (vi) proceeds from claims under certain insurance policies in respect
of individual Financed Vehicles or obligors under the Contracts; (vii) certain
rights under the Sale and Servicing Agreement; (viii) the protective security
interest in certain of the above-described property granted by the Seller in
favor of the Issuer; (ix) all present and future claims, demands, causes and
choses in action in respect of any or all of the foregoing; and (x) all payments
on or under and all proceeds of every kind and nature whatsoever in respect of
any or all of the foregoing, including all proceeds of the conversion, voluntary
or involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing (as each such defined term is defined in
Section 1.01) (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Trustee, as Trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and
<PAGE> 8
agrees to perform its duties required in this Indenture to the best of its
ability to the end that the interests of the Holders of the Notes may be
adequately and effectively protected.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
(a) Except as otherwise specified herein or as the context may
otherwise require, the following terms have the respective meanings set forth
below for all purposes of this Indenture. Capitalized terms used herein that are
not otherwise defined herein shall have the meaning ascribed thereto in the Sale
and Servicing Agreement.
"Act" shall have the meaning specified in Section 11.03(a).
"Administration Agreement" means the Administration Agreement, dated as
of the date hereof, among the Administrator, the Company, the Issuer, the Seller
and the Trustee.
"Administrator" means the Master Servicer, or any successor
Administrator under the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee to the Trustee on the Closing Date (as such list
may be modified or supplemented from time to time thereafter) and, so long as
the Administration Agreement is in effect, any Vice President or more senior
officer of the Administrator who is authorized to act for the Administrator in
matters relating to the Issuer and to be acted upon by the Administrator
pursuant to the Administration Agreement and who is identified on the foregoing
list of Authorized Officers.
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, the Administration Agreement, the Note
Depository Agreement, the Certificate Depository Agreement, the Insurance
Agreement, the Policies and this Indenture.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.09.
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<PAGE> 9
"Business Day" means any day other than a Saturday, Sunday or other day
on which banking institutions in Los Angeles, California, Wilmington, Delaware
or New York, New York are authorized or obligated by law, executive order or
governmental decree to remain closed.
"Certificate Depository Agreement" shall have the meaning specified in
the Trust Agreement.
"Certificate Final Distribution Date" means the __________20, 200_
Distribution Date.
"Certificate of Trust" means the Certificate of Trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Certificate Policy" means the Financial Guaranty Insurance Policy
issued by the Insurer with respect to the certificates issued under the Trust
Agreement.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Distribution Date" means the _________20, 200_
Distribution Date.
"Class A-1 Interest Rate" means _____% per annum (computed on the basis
of a 360-day year and actual number of days elapsed since the immediately
preceding Distribution Date).
"Class A-1 Notes" means the Class A-1 Notes, substantially in the form
of Exhibit C.
"Class A-2 Final Distribution Date" means the _________20,
200_ Distribution Date.
"Class A-2 Interest Rate" means _____% per annum (computed on the basis
of a 360-day year and actual number of days elapsed since the immediately
preceding Distribution Date).
"Class A-2 Notes" means the Class A-2 Notes, substantially in the form
of Exhibit D.
"Class A-3 Final Distribution Date" means the _________20,
200_ Distribution Date.
"Class A-3 Interest Rate" means _____% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Class A-3 Notes" means the Class A-3 Notes, substantially in the form
of Exhibit E.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means November 3, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
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<PAGE> 10
"Collateral" shall have the meaning specified in the Granting Clause of
this Indenture.
"Company" means WFS Investments, Inc., and its successors.
"Controlling Party" means the Insurer, so long as no Insurer Default
shall have occurred and be continuing, and the Trustee, for so long as an
Insurer Default shall have occurred and be continuing.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
which office at date of the execution of this Indenture is located at Four
Albany Street, 10th Floor, New York, New York 10006, Attention: Corporate Trust
Department - Asset Backed Group; or at such other address as the Trustee may
designate from time to time by notice to the Noteholders, the Insurer and the
Issuer, or the principal corporate trust office of any successor Trustee (the
address of which the successor Trustee will notify the Noteholders, the Insurer
and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.09.
"Distribution Date" means each January 20, April 20, July 20, and
October 20 or, if any such date shall not be a Business Day, the next succeeding
Business Day, commencing January 20, 2000.
"DTC" means The Depository Trust Company, and its successors.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"Event of Default" shall have the meaning specified in Section 5.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation or
depository institution, the Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, President, Executive Vice President, any Vice
President, the Secretary or the Treasurer of such corporation or depository
institution; and with respect to any partnership, any general partner thereof.
"Financial Security" means Financial Security Assurance Inc.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other monies payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Pro-
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<PAGE> 11
ceedings in the name of the granting party or otherwise and generally to do and
receive anything that the granting party is or may be entitled to do or receive
thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (i)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (iii) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (iv)
obligations issued for or liabilities incurred on the account of such Person;
(v) obligations or liabilities of such Person arising under acceptance
facilities; (vi) obligations of such Person under any guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (vii) obligations of such Person secured by any lien on property or assets
of such Person, whether or not the obligations have been assumed by such Person;
or (viii) obligations of such Person under any interest rate or currency
exchange agreement.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent" means, when used with respect to any specified Person,
that the Person (i) is in fact independent of the Issuer, any other obligor upon
the Notes, the Seller and any of their respective Affiliates, (ii) does not have
any direct financial interest or any material indirect financial interest in the
Issuer, any such other obligor, the Seller or any of their respective
Affiliates, and (iii) is not connected with the Issuer, any such other obligor,
the Seller or any of their respective Affiliates as an officer, employee,
promoter, underwriter, trustee, partner, director or person performing similar
functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Insurance Agreement" means the Insurance, Indemnity and Pledge
Agreement, dated as of the date hereof, among the Insurer, the Issuer, the
Seller, the Master Servicer, the Company and the Trustee.
"Insurance Agreement Obligations" means, as of any date, the aggregate
amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Policies for which the
Insurer has not yet been reimbursed.
"Insurer" means Financial Security.
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<PAGE> 12
"Insurer Default" means the occurrence and continuance of any of the
following:
(i) the Insurer shall have failed to make a payment required
to be made under the Certificate Policy or the Note Policy;
(ii) the Insurer shall have (a) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (b) made a general
assignment for the benefit of its creditors or (c) had an order for
relief entered against it under the United States Bankruptcy Code, the
New York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority shall
have entered a final and nonappealable order, judgment or decree (a)
appointing a custodian, trustee, agent or receiver for the Insurer or
for all or any material portion of its property or (b) authorizing the
taking of possession by a custodian, trustee, agent or receiver of the
Insurer (or the taking of possession of all or any material portion of
the property of the Insurer).
"Interest Period" means, with respect to any Distribution Date and any
Class of Notes, the period from and including the Distribution Date immediately
preceding such Distribution Date (or, in the case of the first Distribution
Date, from and including October 1, 1999) to but excluding such Distribution
Date.
"Interest Rate" means the Class A-1 Interest Rate, the Class A-2
Interest Rate or the Class A-3 Interest Rate, as applicable.
"Issuer" means WFS Financial 1999-C Owner Trust until a successor
replaces it and, thereafter, means the successor and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by an Authorized Officer and delivered to the
Trustee.
"Master Servicer" means WFS, in its capacity as master servicer under
the Sale and Servicing Agreement, and any successor Master Servicer thereunder.
"Note" means a Class A-1 Note, a Class A-2 Note or a Class A-3 Note.
"Note Depository Agreement" means the agreement dated November __,
1999, among the Issuer, the Trustee and DTC, as the initial Clearing Agency,
relating to the Notes, substantially in the form of Exhibit B hereto.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency
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<PAGE> 13
participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Note Policy" means the Financial Guaranty Insurance Policy issued by
the Insurer with respect to the Notes, including any endorsements thereto,
substantially in the form of Exhibit G hereto.
"Note Policy Claim Amount" shall have the meaning specified in Section
5.18(a).
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.04.
"Notice of Claim" shall have the meaning specified in Section 5.18(b).
"Officer's Certificate" means a certificate signed by an Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, and delivered to
the Trustee.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be an employee of
or counsel to the Issuer and who shall be satisfactory to the Trustee and, if
addressed to the Insurer, satisfactory to the Insurer, and which shall comply
with any applicable requirements of Section 11.01, and shall be in form and
substance satisfactory to the Trustee, and if addressed to the Insurer,
satisfactory to the Insurer.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent in trust for the Holders of such Notes (provided,
however, that if such Notes are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
for such notice has been made, satisfactory to the Trustee, has been
made); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Trustee is presented that any such Notes are
held by a protected purchaser (as such term is defined in Article 8 of
the UCC);
provided, however, that Notes which have been paid with proceeds of the Note
Policy shall continue to remain Outstanding for purposes of this Indenture until
the Insurer has been paid as subrogee hereunder or reimbursed pursuant to the
Insurance Agreement as evidenced by a written notice from the Insurer delivered
to the Trustee, and the Insurer shall be deemed to be the Holder thereof to the
extent of any payments thereon made by the Insurer; provided, further, that in
determining whether the Holders of the requisite Outstanding Amount have given
any request,
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<PAGE> 14
demand, authorization, direction, notice, consent or waiver hereunder or under
any other Basic Document, Notes owned by the Issuer, any other obligor upon the
Notes, the Seller, the Company, WFS or any of their respective Affiliates shall
be disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that the Trustee
knows to be so owned shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller, the Company, WFS or any of their respective Affiliates.
"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"Owner Trustee" means Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor trustee under the Trust Agreement.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and, so long as
no Insurer Default shall have occurred and be continuing, is consented to by the
Insurer and is authorized by the Issuer to make the distributions from the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Policies" means the Note Policy and the Certificate Policy.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Claim" shall have the meaning specified in Section 5.19(b).
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency" means each of Moody's and Standard & Poor's.
"Rating Agency Condition" means, with respect to any action, that (i)
Standard & Poor's shall have been given ten Business Days (or such shorter
period as is acceptable to Standard & Poor's) prior notice thereof and that
Standard & Poor's shall have notified the Seller, the Master Servicer, the
Insurer and the Issuer in writing that such action will not result in a
qualification, reduction or withdrawal of its then-current rating of any Class
of Notes and will not result in an
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<PAGE> 15
increased capital charge to the Insurer and (ii) Moody's shall have been given
ten Business Days (or such shorter period as is acceptable to Moody's) prior
notice thereof and copies of all documentation relating to the event requiring
such Rating Agency Condition.
"Rating Event" means the qualification, reduction or withdrawal by
either Rating Agency of its then-current rating of any Class of Notes.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the Business Day immediately preceding such
Distribution Date or Redemption Date, or, in the event that Definitive Notes are
issued, the close of business on the 15th day of the month immediately preceding
the month in which such Distribution Date or Redemption Date occurs.
"Redemption Date" means in the case of a redemption of the Notes
pursuant to Section 10.01(a) or a payment to Noteholders pursuant to Section
10.01(b), the Distribution Date specified by the Master Servicer or the Issuer
pursuant to Section 10.01(a) or 10.01(b), as the case may be.
"Redemption Price" means (i) in the case of a redemption of the Notes
pursuant to Section 10.01(a), an amount equal to the unpaid principal amount of
the Notes redeemed plus accrued and unpaid interest thereon at the weighted
average of the Interest Rate for each Class of Notes being so redeemed to but
excluding the Redemption Date, or (ii) in the case of a payment made to
Noteholders pursuant to Section 10.01(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (i)
above.
"Registered Holder" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust and Agency Group (or any successor group of the
Trustee), including any Vice President, assistant secretary or other officer or
assistant officer of the Trustee customarily performing function similar to
those performed by the people who at such time shall be officers, respectively,
or to whom any corporate trust matter is referred at the Corporate Trust Office
of the Trustee because of his knowledge of and familiarity with the particular
subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of the date hereof, among the Issuer, the Seller and the Master
Servicer, substantially in the form of Exhibit A hereto.
"Schedule of Contracts" means the listing of the Contracts set forth in
Schedule A hereto.
"Scheduled Payments" shall have the meaning specified therefor in the
Note Policy.
"Seller" shall mean WFS Financial Auto Loans, Inc., in its capacity as
seller under the Sale and Servicing Agreement, and its successors.
"State" means any one of the 50 states of the United States or the
District of Columbia.
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<PAGE> 16
"Successor Master Servicer" shall have the meaning specified in Section
3.07(e).
"Termination Date" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Insurer for cancellation, (ii)
the date on which the Insurer shall have received payment and performance of all
amounts and obligations which the Issuer may owe to or on behalf of the Insurer
under this Indenture and (iii) the date on which the Trustee shall have received
payment and performance of all amounts and obligations which the Issuer may owe
to or on behalf of the Trustee for the benefit of the Noteholders under this
Indenture or the Notes.
"Trust Agreement" means the Trust Agreement, dated as October __, 1999,
as amended and restated as of November 3, 1999, among the Seller, the Insurer,
the Company and the Owner Trustee.
"Trust Estate" means the Collateral Granted to the Trustee under this
Indenture, including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, as in force on the date hereof, unless otherwise specifically
provided.
"Trustee" means Bankers Trust Company, as Trustee under this Indenture,
or any successor Trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"Unreimbursed Insurer Amounts" means, on any date, the amount that is
the sum of (i) all payments (if any) made under the Policies for which the
Insurer has not yet been reimbursed as of such date, plus (ii) all Insurance
Agreement Obligations as of such date.
"United States" means the United States of America.
"WFS" means WFS Financial Inc, and its successors.
(b) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Sale and Servicing Agreement.
Section 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
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<PAGE> 17
"Indenture to be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Trustee.
"Obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03. Rules of Construction. Unless the context otherwise
requires: (i) a term has the meaning assigned to it; (ii) an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles as in effect from time to time; (iii) "or" is not
exclusive; (iv) "including" means including without limitation; (v) words in the
singular include the plural and words in the plural include the singular; (vi)
any agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; (vii) references to a
Person are also to its permitted successors and assigns; and (viii) the words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Indenture shall refer to this Indenture as a whole and not to any particular
provision of this Indenture; and (ix) Section, subsection and Schedule
references contained in this Indenture are references to Sections, subsections
and Schedules in or to this Indenture unless otherwise specified.
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ARTICLE TWO
THE NOTES
Section 2.01. Form. The Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes, in each case together with the Trustee's certificate of
authentication, shall be in substantially the forms set forth as Exhibits to
this Indenture with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibits hereto are part of the terms of this Indenture.
Section 2.02. Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall, upon receipt of the Note Policy and an Issuer Order,
authenticate and deliver for original issue the following aggregate principal
amount of Notes: (i) $224,100,000 of Class A-1 Notes, (ii) $149,425,000 of Class
A-2 Notes and (iii) $73,975,000 of Class A-3 Notes. The aggregate principal
amount of Class A-1 Notes, Class A-2 Notes and Class A-3 Notes outstanding at
any time may not exceed such respective amounts, except as otherwise provided in
Section 2.05.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
Section 2.03. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
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If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the related Holder.
Upon surrender for cancellation of any one or more temporary Notes, the Issuer
shall execute, and the Trustee shall authenticate and deliver in exchange
therefor, a like tenor and principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
Section 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be the "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. Upon any resignation of any Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, provided
that the requirements of Section 8-401 of the UCC are met, the Issuer shall
execute, and the Trustee shall authenticate and the Noteholder shall obtain from
the Trustee, in the name of the designated transferee or transferees, one or
more new Notes of the same Class in any authorized denominations, of a like
aggregate principal amount.
At the option of a Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, provided that the
requirements of Section 8-401 of the UCC are met, the Issuer shall execute, and
the Trustee shall authenticate and the Noteholder shall obtain from the Trustee,
the Notes which the Noteholder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in
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writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in The City of New York or the city
in which the Corporate Trust Office is located, or by a member firm of a
national securities exchange, and such other documents as the Trustee may
require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Trustee may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of Notes,
other than exchanges pursuant to Section 2.03 or 9.06 not involving any
transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for the payment in full of such Note.
Copies of this Indenture (without exhibits) may be obtained by
Noteholders upon request in writing to the Trustee at the Corporate Trust
Office.
Section 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, (ii) there is
delivered to the Trustee and the Insurer (unless an Insurer Default shall have
occurred and be continuing) such security or indemnity as may be required by
them to hold the Issuer, the Trustee and the Insurer harmless and (iii) the
requirements of Section 8-405 of the UCC are met, then, in the absence of notice
to the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a protected purchaser (as defined in Article 8 of the UCC), the
Issuer shall execute and upon its request the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note of the same Class; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within seven days shall be due and payable, or shall have been called
for redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note pursuant to the proviso to the
preceding sentence, a protected purchaser (as defined in Article 8 of the UCC)
of the original Note in lieu of which such replacement Note was issued presents
for payment such original Note, the Issuer, the Insurer and the Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a protected purchaser (as defined in Article 8 of the UCC), and
shall be entitled to recover upon the security or indemnity provided therefor to
the extent of any loss, damage, cost or expense incurred by the Issuer or the
Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Trustee may require the payment by the Holder of such Note of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation thereto and any other reasonable expenses (including the fees and
expenses of the Trustee or the Note Registrar) connected therewith.
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Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
Section 2.06. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee, the Insurer and
any of their respective agents may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
none of the Issuer, the Insurer, the Trustee nor any of their respective agents
shall be affected by notice to the contrary.
Section 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest at the related Interest
Rate, and such interest shall be payable on each Distribution Date as specified
in Article Five of the Sale and Servicing Agreement and in the form of the
related Note set forth as an Exhibit hereto, subject to Section 3.01. Any
installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable
Distribution Date shall be paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.11, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date, a Redemption Date or on the related Final Distribution Date,
as the case may be (and except for the Redemption Price for any Note called for
redemption pursuant to Section 10.01(a)), which shall be payable as provided
below. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.03.
(b) The principal of each Note shall be payable on each Distribution
Date to the extent provided in Article Five of the Sale and Servicing Agreement
and in the form of the related Note set forth as an Exhibit hereto.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable, if not previously paid, on the related Final
Distribution Date or on the date on which an Event of Default shall have
occurred and be continuing, so long as an Insurer Default shall not have
occurred and be continuing or, if an Insurer Default shall have occurred and be
continuing, on the date on which an Event of Default shall have occurred and be
continuing and the Trustee or the Holders of Notes representing not less than a
majority of the Outstanding Amount have declared the Notes to be immediately due
and payable in the manner provided in Section 5.02. All principal payments on
each Class of
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Notes shall be made pro rata to the Noteholders of such Class entitled thereto.
The Trustee shall notify the Person in whose name a Note is registered at the
close of business on the Record Date preceding the Distribution Date on which
the Issuer expects that the final installment of principal of and interest on
such Note will be paid. Such notice shall be mailed within five Business Days of
such Distribution Date (or, in the case of Notes registered in the name of Cede
& Co., as nominee of DTC, such notice shall be provided within one Business Day
of such Distribution Date) or receipt of notice of termination of the Trust
pursuant to Section 9.01(c) of the Trust Agreement and shall specify that such
final installment will be payable only upon presentation and surrender of such
Note and shall specify the place where such Note may be presented and
surrendered for payment of such installment. Notices in connection with
redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02. In addition, the Administrator shall notify the Rating Agencies upon the
final payment of interest and principal of each Class of Notes, and upon the
termination of the Trust, in each case pursuant to Section 1(a)(i) of the
Administration Agreement.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the applicable Interest Rate in any lawful manner. The
Issuer may pay such defaulted interest to the Persons who are Noteholders on a
subsequent special record date, which date shall be at least five Business Days
prior to the related payment date. The Issuer shall fix or cause to be fixed any
such special record date and payment date, and, at least 15 days before any such
special record date, the Issuer shall mail to the Trustee and each Noteholder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
(d) Promptly following the date on which all principal of and interest
on the Notes has been paid in full and the Notes have been surrendered to the
Trustee, the Trustee shall, if the Insurer has paid any amount in respect of the
Notes under the Note Policy which has not been reimbursed to it, deliver such
surrendered Notes to the Insurer.
Section 2.08. Cancellation. Subject to Section 2.07(d), all Notes
surrendered for payment, registration of transfer, exchange or redemption shall,
if surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by the Trustee. Subject to Section 2.07(d), the
Issuer may at any time deliver to the Trustee for cancellation any Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Notes so delivered shall be promptly
cancelled by the Trustee. No Notes shall be authenticated in lieu of or in
exchange for any Notes cancelled as provided in this Section, except as
expressly permitted by this Indenture. Subject to Section 2.07(d), all cancelled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be destroyed or returned to it; provided
that such Issuer Order is timely and the Notes have not been previously disposed
of by the Trustee.
Section 2.09. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to DTC, the initial Clearing Agency, by, or on behalf of,
the Issuer. Such Notes shall initially be registered on the Note Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no Note
Owner will receive a Definitive Note representing such Note Owner's
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interest in such Note, except as provided in Section 2.11. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued to
Note Owners pursuant to Section 2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Indenture
(including the payment of principal of and interest on the Notes and
the giving of instructions or directions hereunder) as the sole holder
of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants; pursuant to the Note Depository
Agreement, unless and until Definitive Notes are issued pursuant to
Section 2.11, the Clearing Agency will make book-entry transfers among
the Clearing Agency Participants and receive and transmit payments of
principal of and interest on the Notes to such Clearing Agency
Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Holders of Notes
evidencing a specified percentage of the Outstanding Amount, the
Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from Note
Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in
the Notes and has delivered such instructions to the Trustee.
Section 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
Section 2.11. Definitive Notes. If (i)(A) the Administrator advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities as described in the Note Depository
Agreement, and (B) Trustee or the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Trustee in writing
that it elects to terminate the book-entry system through the Clearing Agency,
or (iii) after the occurrence of an Event of Default, the Note Owners
representing not less than 51% of the Outstanding Amount of a Class of Notes
advise the Trustee and the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of the related Note Owners,
then the Trustee shall notify all Note Owners of the related Class of Notes,
through the Clearing Agency, of the occurrence of such event and of the
availability of Definitive Notes of the related Class of Notes to Note Owners
requesting the same. Upon surrender to the Trustee of the Note or Notes
representing
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the Book-Entry Notes by the Clearing Agency, accompanied by registration
instructions, the Issuer shall execute and the Trustee shall authenticate the
Definitive Notes in accordance with the instructions of the Clearing Agency.
None of the Issuer, the Note Registrar or the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on, such instructions. Upon the issuance of Definitive
Notes of a Class, the Trustee shall recognize the Holders of the Definitive
Notes as Noteholders hereunder.
The Trustee shall not be liable if the Trustee or the Administrator is
unable to locate a qualified successor Clearing Agency. The Definitive Notes
shall be typewritten, printed, lithographed or engraved or produced by any
combination of these methods (with or without steel engraved borders), all as
determined by the officers executing such Notes, as evidenced by their execution
of such Notes.
Section 2.12. Release of Collateral. Subject to Section 11.01 and the
other Basic Documents, the Trustee shall release property from the lien of this
Indenture only upon receipt of an Issuer Request accompanied by an Officer's
Certificate, an Opinion of Counsel and Independent Certificates in accordance
with TIA Sections 314(c) and 314(d)(l) or an Opinion of Counsel in lieu of
such Independent Certificates to the effect that the TIA does not require any
such Independent Certificates.
Section 2.13. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness of the Issuer secured by the Trust Estate. The
Issuer, by entering into this Indenture, and each Noteholder, by its acceptance
of its Note (and each Note Owner by its acceptance of an interest in the
applicable Book-Entry Note), agree to treat the Notes for federal, state and
local income, single business and franchise tax purposes as indebtedness of the
Issuer.
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ARTICLE THREE
COVENANTS
Section 3.01. Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 8.02(c), the Issuer will cause to be distributed
all amounts on deposit in the Note Distribution Account in respect of the
related Collection Period on a Distribution Date deposited therein pursuant to
the Sale and Servicing Agreement for the benefit of (i) the Class A-1 Notes, to
the Class A-1 Noteholders, (ii) the Class A-2 Notes, to the Class A-2
Noteholders and (iii) the Class A-3 Notes, to the Class A-3 Noteholders. Amounts
properly withheld under the Code by any Person from a payment to any Noteholder
of interest and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
Section 3.02. Maintenance of Office or Agency. The Chase Manhattan
Bank, as agent for the Issuer, will maintain in The City of New York an office
or agency where Notes may be surrendered for registration of transfer or
exchange, and where notices and demands to or upon the Issuer in respect of the
Notes and this Indenture may be served. The Issuer hereby initially appoints the
Trustee to serve as its agent for the foregoing purposes. The Issuer will give
prompt written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
Section 3.03. Money for Payments to be Held in Trust. As provided in
Sections 5.06 and 8.02, all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.02(b) shall be made on
behalf of the Issuer by the Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
On the Business Day immediately preceding each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless the Paying Agent is the Trustee) shall promptly
notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee and the Insurer an instrument in which such
Paying Agent shall agree with the Trustee (and if the Trustee acts as Paying
Agent, it hereby so agrees), subject to the provisions of this Section, that
such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid
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to such Persons or otherwise disposed of as herein provided and pay
such sums to such Persons as herein provided;
(ii) give the Trustee notice of any default by the Issuer (or
any other obligor upon the Notes) in the making of any payment required
to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to
the Trustee all sums held by it in trust for the payment of Notes if at
any time it ceases to meet the standards required to be met by a Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Trustee or any Paying Agent in trust for the payment of any amount
due with respect to any Note and remaining unclaimed for two years after such
amount has become due and payable shall be discharged from such trust and upon
receipt of an Issuer Request with the consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) shall be deposited by the Trustee
in the Collection Account; and the Holder of such Note shall thereafter, as an
unsecured general creditor, look only to the Issuer for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease; provided, however, that if such money or any portion
thereof had been previously deposited by the Insurer with the Trustee for the
payment of principal or interest on the Notes, to the extent any amounts are
owing to the Insurer, such amounts shall be paid promptly to the Insurer upon
receipt of a written request by the Insurer to such effect, and provided,
further, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Issuer cause to be published once,
in a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to or for the account of the
Issuer. The Trustee may also adopt and employ, at the expense of the Issuer, any
other reasonable means of notification of such repayment (including, but not
limited to, mailing notice of such repayment to Holders whose Notes
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have been called but have not been surrendered for redemption or whose right to
or interest in monies due and payable but not claimed is determinable from the
records of the Trustee or of any Paying Agent, at the last address of record for
each such Holder).
Section 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, the Collateral and each other instrument or agreement
included in the Trust Estate.
Section 3.05. Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Trustee on
behalf of the Noteholders to be prior to all other liens in respect of the Trust
Estate, and the Issuer shall take all actions necessary to obtain and maintain,
for the benefit of the Trustee on behalf of the Noteholders, a first lien on and
a first priority, perfected security interest in the Trust Estate, subject to
the rights of the Insurer under the Insurance Agreement. The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation statements, instruments of further
assurance and other instruments, all as prepared by the Master Servicer and
delivered to the Issuer, and will take such other action necessary or advisable
to:
(i) Grant more effectively all or any portion of the Trust
Estate;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Trust Estate and the
rights of the Trustee and the Noteholders in such Trust Estate against
the claims of all persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
Trust Estate when due.
The Issuer hereby designates the Trustee its agent and attorney-in-fact
to execute all financing statements, continuation statements or other
instruments required to be executed pursuant to this Section.
Section 3.06. Opinions as to Trust Estate.
(a) Promptly after the execution and delivery of this Indenture, the
Issuer shall furnish to the Trustee and the Insurer an Opinion of Counsel to the
effect that, in the opinion of such counsel, either (i) all financing statements
and continuation statements have been executed
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and filed that are necessary to create and continue the Trustee's first priority
perfected security interest in the collateral (subject to the rights of the
Insurer under the Insurance Agreement) for the benefit of the Noteholders, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (ii) no such action shall be necessary to
perfect such security interest.
(b) Within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the Cut-Off
Date, the Issuer shall furnish to the Trustee and the Insurer an Opinion of
Counsel, dated as of a date during such 90-day period, to the effect that, in
the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Trustee's first priority perfected security interest in
the collateral (subject to the rights of the Insurer under the Insurance
Agreement) for the benefit of the Noteholders, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (ii) no such action shall be necessary to perfect such security
interest.
Section 3.07. Performance of Obligations; Servicing of Contracts.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others, including the Servicer, that
would release any Person from any of such Person's material covenants or
obligations under any instrument or agreement included in the Trust Estate or
that would result in the amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of, any such instrument or
agreement, except as expressly provided in the Basic Documents or such other
instrument or agreement.
(b) The Issuer may contract with other Persons acceptable to the
Insurer (so long as no Insurer Default shall have occurred and be continuing) to
assist it in performing its duties and obligations under this Indenture, and any
performance of such duties by a Person identified to the Trustee and the Insurer
in an Officer's Certificate shall be deemed to be action taken by the Issuer.
The Trustee shall not be responsible for the action or inaction of the Master
Servicer or the Administrator. Initially, the Issuer has contracted with the
Master Servicer and the Administrator to assist the Issuer in performing its
duties under this Indenture.
(c) The Issuer will, and will cause the Administrator to, punctually
perform and observe all of the obligations and agreements of the Issuer and the
Administrator contained in this Indenture, the other Basic Documents and in the
instruments and agreements included in the Trust Estate, including but not
limited to filing or causing to be filed all UCC financing statements and
continuation statements required to be filed by the terms of this Indenture and
the other Basic Documents in accordance with and within the time periods
provided for herein and therein. Except as otherwise expressly provided therein,
the Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Trustee or the
Holders of at least a majority of the Outstanding Amount or such greater
percentage as may be specified in the particular provision.
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default, the Issuer shall promptly notify the Trustee, the Insurer and each
Rating Agency thereof, and shall specify in such notice the action, if any, the
Issuer is taking with respect of such default. If a
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Servicer Default shall arise from the failure of the Master Servicer to perform
any of its duties or obligations under the Sale and Servicing Agreement with
respect to the Contracts, the Issuer shall take all reasonable steps available
to it to remedy such failure.
(e) If an Insurer Default shall have occurred and be continuing and if
the Issuer has given notice of termination to the Master Servicer of the Master
Servicer's rights and powers pursuant to Section 8.02 of the Sale and Servicing
Agreement, as promptly as possible thereafter, the Issuer shall appoint a
successor servicer (the "Successor Master Servicer"), and such Successor Master
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Trustee. In the event that a Successor Master Servicer has not
been appointed and accepted its appointment at the time when the Master Servicer
ceases to act as Master Servicer, the Trustee without further action shall
automatically be appointed the Successor Master Servicer. The Trustee may resign
as the Successor Master Servicer by giving written notice of such resignation to
the Issuer and in such event will be released from such duties and obligations,
such release not to be effective until the date a new servicer enters into a
servicing agreement with the Issuer as provided below. Upon delivery of any such
notice to the Issuer, the Issuer shall obtain a new servicer as the Successor
Master Servicer under the Sale and Servicing Agreement. Any Successor Master
Servicer other than the Trustee shall (i) be an established financial
institution having a net worth of not less than $50,000,000 and whose regular
business includes the servicing of motor vehicle receivables and (ii) enter into
a servicing agreement with the Issuer having substantially the same provisions
as the provisions of the Sale and Servicing Agreement applicable to the Master
Servicer. If within 30 days after the delivery of the notice referred to above,
the Issuer shall not have obtained such a new Master Servicer, the Trustee may
appoint, or may petition a court of competent jurisdiction to appoint, a
Successor Master Servicer. In connection with any such appointment, the Trustee
may make such arrangements for the compensation of such successor as it and such
successor shall agree, subject to the limitations set forth below and in the
Sale and Servicing Agreement, and in accordance with Section 8.02 of the Sale
and Servicing Agreement, the Issuer shall enter into an agreement with such
successor for the servicing of the Contracts (such agreement to be in form and
substance satisfactory to the Trustee). If the Trustee shall succeed to the
Master Servicer's duties as servicer of the Contracts as provided herein, it
shall do so in its individual capacity and not in its capacity as Trustee and,
accordingly, the provisions of Article Six shall be inapplicable to the Trustee
in its duties as the successor to the Master Servicer and the servicing of the
Contracts. In case the Trustee shall become successor to the Master Servicer
under the Sale and Servicing Agreement, the Trustee shall be entitled to appoint
as Master Servicer one of its Affiliates, provided that it shall be fully liable
for the actions and omissions of such Affiliate in such capacity as Successor
Master Servicer.
(f) Upon any termination of the Master Servicer's rights and powers
pursuant to the Sale and Servicing Agreement, the Issuer shall promptly notify
the Trustee. As soon as a successor Master Servicer is appointed, the Issuer
shall notify the Trustee of such appointment, specifying in such notice the name
and address of such successor Master Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Master Servicer or the Seller of their respective duties under
the Basic Documents: (i) without the prior consent of the Insurer (unless an
Insurer Default shall have occurred and be continuing) or (ii) if the effect
thereof would adversely affect the Holders of the Notes.
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Section 3.08. Negative Covenants. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by the Basic Documents,
sell, transfer, exchange or otherwise dispose of any of the properties
or assets of the Issuer, including those included in the Trust Estate,
unless directed to do so by the Controlling Party;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or assessed
upon any part of the Trust Estate;
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien created by this Indenture
to be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture or the lien in favor of the Insurer created by the Insurance
Agreement) to be created on or extend to or otherwise arise upon or
burden the Trust Estate or any part thereof or any interest therein or
the proceeds thereof (other than tax liens, mechanics' liens and other
liens that arise by operation of law, in each case on a Financed
Vehicle and arising solely as a result of an action or omission of the
related Obligor), (C) permit the lien created by this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Trust Estate,
or (D) amend, modify or fail to comply with the provisions of the Basic
Documents without the prior written consent of the Controlling Party,
except where the Basic Documents allow for amendment or modification
without the consent or approval of the Controlling Party; or
(iv) dissolve or liquidate in whole or in part.
Section 3.09. Annual Statement as to Compliance. The Issuer will
deliver to the Trustee and the Insurer, on or before 120 days after the end of
each fiscal year of the Issuer (commencing with the fiscal year ended December
31, 1999) an Officer's Certificate stating, as to the Authorized Officer signing
such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
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Section 3.10. Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form and substance satisfactory to the
Trustee and the Insurer (so long as no Insurer Default shall have
occurred and be continuing), the due and punctual payment of the
principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture and each
other Basic Document on the part of the Issuer to be performed or
observed, all as provided herein;
(ii) immediately after giving effect to such consolidation or
merger, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such consolidation or merger;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Trustee
and the Insurer (so long as no Insurer Default shall have occurred and
be continuing) to the effect that such consolidation or merger will not
have any material adverse tax consequence to the Trust, the Insurer,
any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel (which shall describe
the actions taken as required by clause (v) above or that no such
actions will be taken) each stating that such consolidation or merger
and such supplemental indenture comply with this Article Three and that
all conditions precedent herein provided for relating to such
transaction have been compiled with (including any filings required by
the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such consolidation or merger at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Insurer of such consolidation or merger and the Issuer
or the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (A) greater than zero and (B) not less
than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Trust Estate, to any
Person (except as expressly permitted by the Basic Documents), unless:
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(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the United
States or any State, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form and substance
satisfactory to the Trustee and the Insurer (so long as no Insurer
Default shall have occurred and be continuing), the due and punctual
payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture and each other Basic Document on the part of the Issuer to be
performed or observed, all as provided herein, (C) expressly agree by
means of such supplemental indenture that all right, title and interest
so conveyed or transferred shall be subject and subordinate to the
rights of Holders of the Notes, (D) unless otherwise provided in such
supplemental indenture, expressly agree to indemnify, defend and hold
harmless the Issuer against and from any loss, liability or expense
arising under or related to this Indenture and the Notes and (E)
expressly agree by means of such supplemental indenture that such
Person (or if a group of Persons, then one specified Person) shall make
all filings with the Commission (and any other appropriate Person)
required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such conveyance or
transference, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such conveyance or transference;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Trustee
and the Insurer (so long as no Insurer Default shall have occurred and
be continuing) to the effect that such conveyance or transference will
not have any material adverse tax consequence to the Trust, the
Insurer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel (which shall describe
the actions taken as required by clause (v) above or that no such
actions will be taken) each stating that such conveyance or
transference and such supplemental indenture comply with this Article
Three and that all conditions precedent herein provided for relating to
such transaction have been complied with (including any filings
required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such conveyance or transfer of properties or assets at least 20
Business Days prior to the consummation of such action and shall have
received the prior written approval of the Insurer of such conveyance
or transfer and the Person acquiring by conveyance or transference the
properties or assets of the Issuer has a net worth, immediately after
such conveyance or transfer, that is
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(A) greater than zero and (B) not less than the net worth of the Issuer
immediately prior to giving effect to such conveyance or transfer.
Section 3.11. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.10(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the
assets or properties of the Issuer pursuant to Section 3.10(b), the Issuer will
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Trustee stating that the Issuer is to
be so released.
Section 3.12. No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Indenture and the other Basic
Documents and activities incidental thereto.
Section 3.13. No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
Indebtedness except for (i) the Notes, (ii) obligations or Indebtedness owing
from time to time to the Insurer under the Insurance Agreement and (iii) any
other Indebtedness permitted by or arising under the other Basic Documents. The
proceeds of the Notes and the Certificates shall be used exclusively to fund the
Issuer's purchase of the Contracts and the other assets specified in the Sale
and Servicing Agreement, to fund the Spread Account and to pay the transactional
expenses of the Issuer.
Section 3.14. Master Servicer's Obligations. The Issuer shall cause the
Master Servicer to comply with Sections 4.09, 4.10, 4.11 and 5.07 and Article
Nine of the Sale and Servicing Agreement.
Section 3.15. Guarantees, Loans, Advances and Other Liabilities. Except
as otherwise contemplated by the Basic Documents, the Issuer shall not make any
loan or advance or credit to, or guarantee (directly or indirectly or by an
instrument having the effect of assuming another's payment or performance on any
obligation or capability of so doing or otherwise), endorse or otherwise become
contingently liable, directly or indirectly, in connection with the obligations,
stocks or dividends of, or own, purchase, repurchase or acquire (or agree
contingently to do so) any stock, obligations, assets or securities of, any
other interest in, or make any capital contribution to, any other Person.
Section 3.16. Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
Section 3.17. Restricted Payments. Except as expressly permitted by the
Basic Documents, the Issuer shall not, directly or indirectly, (i) pay any
dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
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respect to any ownership or equity interest or security in or of the Issuer or
to the Master Servicer, (ii) redeem, purchase, retire or otherwise acquire for
value any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (A) distributions to the Master
Servicer, the Owner Trustee and the Certificateholders as contemplated by, and
to the extent funds are available for such purpose under, the Sale and Servicing
Agreement or the Trust Agreement and (B) payments to the Trustee and the Owner
Trustee pursuant to Section 1(a)(ii) of the Administration Agreement. The Issuer
will not, directly or indirectly, make payments to or distributions from the
Collection Account except in accordance with this Indenture and the other Basic
Documents.
Section 3.18. Notice of Events of Default. The Issuer agrees to give
the Trustee, the Insurer and each Rating Agency prompt written notice of each
Event of Default hereunder and each default on the part of the Master Servicer
or the Seller of their respective obligations under the Sale and Servicing
Agreement.
Section 3.19. Further Instruments and Acts. Upon request of the Trustee
or the Insurer, the Issuer will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.20. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
Section 3.21. Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 10.01 of the
Sale and Servicing Agreement or Section 11.01 of the Trust Agreement to
eliminate the requirements thereunder that the Trustee or the Holders of the
Notes consent to amendments thereto as provided therein.
Section 3.22. Removal of Administrator. If an Insurer Default shall
have occurred and be continuing, so long as any Notes are issued and
outstanding, the Issuer shall not remove the Administrator without cause unless
the Rating Agency Condition shall have been satisfied in connection with such
removal.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.07,
3.08, 3.10, 3.12, 3.13, 3.20 and 3.21, (v) the rights, obligations and
immunities of the Trustee hereunder (including the rights of the Trustee under
Section 6.07 and the obligations of the Trustee under Section 4.02), (vi) the
rights of Noteholders as beneficiaries hereof with respect to the property so
deposited with the Trustee payable to all or any of them and (vii) the
obligation of the Trustee to make claims under the Note Policy, which shall
survive the Class A-3 Final Distribution Date and extend through any preference
period applicable with respect to the Notes or any payments made in respect of
the Notes, and the Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have
been replaced or paid as provided in Section 2.05 and (ii) Notes for
whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.03) have
been delivered to the Trustee for cancellation and the Note Policy has
expired and been returned to the Insurer for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable,
(ii) will become due and payable at the Class A-3
Final Distribution Date within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of clauses (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee cash or direct obligations of or obligations guaranteed by the
United States (which will mature prior to the date such amounts are
payable), in trust in an Eligible Account for such purpose, in an
amount sufficient to pay and discharge the entire indebtedness on such
Notes not theretofore delivered to the Trustee for cancellation when
due to the final scheduled Distribution Date or Redemption Date (if
Notes shall have been called for redemption pursuant to Section
10.01(a)), as the case may be;
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(B) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or on
behalf of (1) the Trustee for the benefit of the Noteholders under this
Indenture or the Notes and (2) the Insurer under this Indenture; and
(C) the Issuer has delivered to the Trustee and the Insurer an
Officer's Certificate, an Opinion of Counsel and (if required by the
TIA, the Trustee and the Insurer) an Independent Certificate from a
firm of certified public accountants, each meeting the applicable
requirements of Section 11.01(a) and, subject to Section 11.02, each
stating that all conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture have been complied
with (and, in the case of the foregoing Officer's Certificate, stating
that the Rating Agency Condition has been satisfied).
Section 4.02. Application of Trust Money. All monies deposited with the
Trustee pursuant to Section 4.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent, as the Trustee may determine, to
the Holders of the particular Notes for the payment or redemption of which such
monies have been deposited with the Trustee, of all sums due and to become due
thereon for principal and interest; but such monies need not be segregated from
other funds except to the extent required herein or in the Sale and Servicing
Agreement or required by law.
Section 4.03. Repayment of Monies Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Trustee to be held and applied according to Section
3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
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ARTICLE FIVE
REMEDIES
Section 5.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default by the Issuer in the payment of any interest on
any Note when the same becomes due and payable, and such default shall
continue for a period of five days, without taking into account the
effect of any payment under the Note Policy;
(ii) default by the Issuer in the payment of the principal of
or any installment of the principal of any Note when the same becomes
due and payable, without taking into account the effect of any payment
under the Note Policy;
(iii) default in the observance or performance of any covenant
or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of
which is elsewhere in this Section specifically dealt with), or any
representation or warranty of the Issuer made in this Indenture or in
any certificate or other writing delivered pursuant hereto or in
connection herewith proves to have been incorrect in any material
respect as of the time when the same shall have been made, and such
default shall continue or not be cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a
period of 30 days after there shall have been given, by registered or
certified mail, to the Issuer and the Trustee by the Insurer (so long
as an Insurer Default shall not have occurred and be continuing) or, if
an Insurer Default shall have occurred and be continuing, to the Issuer
by the Trustee or to the Issuer and the Trustee by the Holders of at
least 25% of the Outstanding Amount of the Notes, taken together as a
single class, a written notice specifying such default or incorrect
representation or warranty and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any
substantial part of the Trust Estate in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the
Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 60
consecutive days; or
(v) the commencement by the Issuer of a voluntary case under
any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by the Issuer to the
entry of an order for relief in an involuntary case under
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any such law, or the consent by the Issuer to the appointment or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of the Issuer or for any substantial
part of the Trust Estate, or the making by the Issuer of any general
assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee and the Insurer, within five
days after obtaining knowledge of the occurrence thereof, written notice in the
form of an Officer's Certificate of any event which with the giving of notice
and the lapse of time would become an Event of Default under clause (iii) above,
its status and what action the Issuer is taking or proposes to take with respect
thereto.
Section 5.02. Rights upon Event of Default.
(a) So long as no Insurer Default has occurred and is continuing, if an
Event of Default shall have occurred and be continuing, then with the consent of
the Insurer, the Notes shall become immediately due and payable at par, together
with accrued interest thereon. The Trustee will have no discretion with respect
to the acceleration of the Notes under the foregoing circumstances. In the event
of any such acceleration of the Notes, the Trustee shall continue to be entitled
to make claims under the Note Policy pursuant to Section 5.18 for Scheduled
Payments on the Notes. Payments under the Note Policy following acceleration of
the Notes shall be applied by the Trustee:
(i) to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for interest; and
(ii) to each Class of Noteholders for amounts due and unpaid
on such Class of Notes for principal, ratably, without preference or
priority of any kind, according to amounts due and payable on the Notes
for principal.
(b) So long as no Insurer Default has occurred and is continuing, in
the event the Notes are accelerated due to an Event of Default, the Insurer
shall have the right (in addition to its obligation to pay Scheduled Payments on
the Notes in accordance with the Note Policy), but not the obligation, to elect:
(i) to cause the Trustee or the Master Servicer, subject to
Section 5.04, to sell or liquidate the Trust Estate, in whole or in
part, on any date or dates following such acceleration as the Insurer,
in its sole discretion, shall elect; or
(ii) to pay Scheduled Payments on the Notes in accordance with
the Note Policy.
(c) If an Insurer Default shall have occurred and be continuing and an
Event of Default shall have occurred and be continuing, the Trustee may, or if
so requested in writing by Holders of Notes representing at least 66 2/3% of the
aggregate Outstanding Amount, upon prior written notice to each Rating Agency,
shall declare by written notice to the Issuer that the Notes
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become, whereupon they shall become, immediately due and payable at par,
together with accrued interest thereon. Notwithstanding anything to the contrary
in this paragraph (c), if an Event of Default specified in Section 5.01(iv) or
(v) shall occur and be continuing when an Insurer Default has occurred and is
continuing, the Notes shall become immediately due and payable at par, together
with accrued interest thereon.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Trustee; Authority of Controlling Party.
(a) The Issuer covenants that if the Notes are accelerated following
the occurrence of an Event of Default, the Issuer will, upon demand of the
Trustee, pay to it, for the benefit of the Holders of the Notes, the whole
amount then due and payable on such Notes for principal and interest, with
interest upon the overdue principal, and, to the extent payment at such rate of
interest shall be legally enforceable, upon overdue installments of interest, at
the applicable Interest Rate and in addition thereto such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel.
(b) Each of the Trustee and the Insurer hereby irrevocably and
unconditionally appoints the Controlling Party as the true and lawful
attorney-in-fact of such Person for so long as such Person is not the
Controlling Party, with full power of substitution, to execute, acknowledge and
deliver any notice, document, certificate, paper, pleading or instrument and to
do in the name of the Controlling Party as well as in the name, place and stead
of such Person such acts, things and deeds for or on behalf of and in the name
of such Person under this Indenture (including specifically under Section 5.04)
and under the other Basic Documents which such Person could or might do or which
may be necessary, desirable or convenient in such Controlling Party's sole
discretion to effect the purposes contemplated hereunder and under the other
Basic Documents and, without limitation, following the occurrence of an Event of
Default, exercise full right, power and authority to take, or defer from taking,
any and all acts with respect to the administration, maintenance or disposition
of the Trust Estate.
(c) If an Event of Default occurs and is continuing, the Trustee may in
its discretion but with the consent of the Controlling Party (except as provided
in Section 5.03(d)), proceed to protect and enforce the rights of the
Noteholders, by such appropriate Proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.
(d) Notwithstanding anything to the contrary contained in this
Indenture and regardless of whether an Insurer Default shall have occurred and
be continuing, if the Issuer fails to perform its obligations under Section
10.01(b) when and as due, the Trustee may in its discretion (and without the
consent of the Controlling Party) proceed to protect and enforce its rights and
the rights of the Noteholders by such appropriate proceedings as the Trustee
shall deem most effective to protect and enforce any such rights, whether for
specific performance of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other remedy or
legal or equitable right vested in the Trustee by this Indenture or
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by law; provided that the Trustee shall only be entitled to take any such
actions without the consent of the Controlling Party to the extent such actions
(i) are taken only to enforce the Issuer's obligations to redeem the principal
amount of Notes, and (ii) are taken only against the portion of the Collateral,
if any, consisting of the Spread Account, any investments therein and any
proceeds thereof.
(e) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the creditors or property of the Issuer
or such other obligor, the Trustee, irrespective of whether the principal of any
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand
pursuant to the provisions of this Section, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee,
and their respective agents, attorneys and counsel, and for
reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as a
result of negligence or bad faith) and of the Noteholders allowed in
such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders of Notes in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Trustee or the Holders of Notes allowed in any Proceedings
relative to the Issuer, its creditors and its property; and any
trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to
make payments to the Trustee, and, in the event that the Trustee shall
consent to the making of payments directly to such Noteholders, to pay
to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their
respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee except as a result of negligence or bad faith.
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(f) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar Person.
(g) All rights of action and of asserting claims under this Indenture
or under any of the Notes, may be enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any such action or Proceedings instituted by the Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, subject to the payment of the expenses, disbursements and
compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(h) In any Proceedings brought by the Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Trustee shall be held to represent all the Holders of the Notes, and it
shall not be necessary to make any Noteholder a party to any such Proceedings.
Section 5.04. Remedies. If an Event of Default shall have occurred and
be continuing the Controlling Party may (subject to Sections 5.02 and 5.05):
(i) institute Proceedings in its own name and as or on behalf
of a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes monies
adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust
Estate;
(iii) exercise any remedies of a secured party under the UCC
and any other remedy available to the Trustee and take any other
appropriate action to protect and enforce the rights and remedies of
the Trustee on behalf of the Noteholders under this Indenture or the
Notes; and
(iv) direct the Trustee or the Master Servicer to sell or
otherwise liquidate the Trust Estate or any portion thereof or rights
or interests therein, at one or more public or private sales called and
conducted in any manner permitted by law and deliver the proceeds of
such sale or liquidation to the Trustee for distribution in accordance
with the terms of this Indenture; provided, however, that, except as
otherwise provided in the immediately succeeding sentence, no such sale
or liquidation can be made if the proceeds of such sale or liquidation
distributable to the Noteholders are not sufficient to pay all
outstanding principal of and accrued interest on the Notes.
Notwithstanding the foregoing, the proceeds of such sale or liquidation
need not be sufficient to pay all outstanding principal of and accrued interest
on the Notes if (A) the Insurer is the Controlling Party and the related Event
of Default arose as described in clause (i), (ii), (iv)
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or (v) of Section 5.01 or (B) the Trustee is the Controlling Party and (1) the
Holders of 100% of the Outstanding Amount of the Notes, voting together as a
single class, consent to such sale or liquidation or (2) the Trustee determines
that the Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they would have become due
if the Notes had not been declared due and payable, the Trustee provides prior
written notice of such sale or liquidation to each Rating Agency and Holders of
66K% of the Outstanding Amount of the Notes, voting together as a single class,
consent to such sale or liquidation. In determining such sufficiency or
insufficiency of (i) the proceeds of such sale or liquidation to pay all
outstanding principal of and accrued interest on the Notes or (ii) the Trust
Estate to provide sufficient funds for the payment of principal of and interest
on the Notes as they would have become due if the Notes had not been declared
due and payable, the Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
Section 5.05. Optional Preservation of the Contracts. If the Trustee is
the Controlling Party and if the Notes have been declared to be due and payable
under Section 5.02 following an Event of Default and such declaration and its
consequences have not been rescinded and annulled, the Trustee may, but need
not, elect to maintain possession of the Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the Notes, and the Trustee shall
take such desire into account when determining whether or not to maintain
possession of the Trust Estate. In determining whether to maintain possession of
the Trust Estate, the Trustee may, but need not, obtain and rely upon an opinion
of an Independent investment banking or accounting firm of national reputation
as to the feasibility of such proposed action and as to the sufficiency of the
Trust Estate for such purpose.
Section 5.06. Priorities.
(a) If the Trustee collects any money or property pursuant to this
Article (excluding any payments made under the Note Policy), it shall pay out
the money or property in the following order and priority:
(i) amounts due and owing and required to be distributed to
the Master Servicer, the Owner Trustee and the Trustee, respectively,
pursuant to clauses (i) and (ii) of Section 5.05(a) of the Sale and
Servicing Agreement and not previously distributed, in the order of
such priorities and without preference or priority of any kind within
such priorities;
(ii) to each Class of Noteholders, accrued and unpaid interest
on the outstanding principal amount of the related Class of Notes at
the related Interest Rate, together with, to the extent permitted by
applicable law, interest at the related Interest Rate on any interest
accrued but not timely paid;
(iii) to Holders of the Class A-1 Notes for amounts due and
unpaid on the Class A-1 Notes for principal, ratably, without
preference or priority of any kind,
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according to the amounts due and payable on the Class A-1 Notes for
principal, until the Outstanding Amount of the Class A-1 Notes is
reduced to zero;
(iv) to Holders of the Class A-2 Notes for amounts due and
unpaid on the Class A-2 Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A-2 Notes for principal, until the Outstanding
Amount of the Class A-2 Notes is reduced to zero;
(v) to Holders of the Class A-3 Notes for amounts due and
unpaid on the Class A-3 Notes for principal, ratably, without
preference or priority of any kind, according to the amounts due and
payable on the Class A-3 Notes for principal, until the Outstanding
Amount of the Class A-3 Notes is reduced to zero;
(vi) amounts due and unpaid on the Certificates for interest
and principal, to the Owner Trustee for distribution to
Certificateholders in accordance with Section 5.02(a) of the Trust
Agreement;
(vii) amounts due and owing and required to be distributed to
the Insurer pursuant to clause (ix) of Section 5.05(a) of the Sale and
Servicing Agreement and not previously distributed; and
(viii) any excess amounts remaining after making the
distributions described in clauses (i) through (viii) above shall be
distributed in the following order of priority: into the Spread Account
until the amounts deposited therein equal the Specified Spread Account
Balance, with any excess being distributed, first, to the Insurer, to
the extent of any Unreimbursed Insurer Amounts, second, to the Seller
until the Seller has received an aggregate amount equal to the Spread
Account Initial Deposit and third, to the Seller and the Company in the
proportions of 99% and 1%, respectively.
(b) The Trustee may fix a record date and payment date for any payment
to Noteholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Noteholder and the Trustee a notice that
states the record date, the payment date and the amount to be paid.
Section 5.07. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Notes have made written request to the Trustee to
institute such Proceeding in respect of such Event of Default in its
own name as Trustee hereunder;
(iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in complying with such request;
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(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
Proceedings;
(v) no direction inconsistent with such written request has
been given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes, voting together as a
single class; and
(vi) an Insurer Default shall have occurred and be continuing.
It is understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine that action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
Section 5.08. Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder; provided, however, that so long as an
Insurer Default shall not have occurred and be continuing, no such suit shall be
instituted.
Section 5.09. Restoration of Rights and Remedies. If the Controlling
Party or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Trustee or to
such Noteholder, then and in every such case the Issuer, the Trustee and the
Noteholders shall, subject to any determination in such Proceeding, be restored
severally and respectively to their former positions hereunder, and thereafter
all rights and remedies of the Trustee and the Noteholders shall continue as
though no such Proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Controlling Party or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Controlling Party or any Holder of any Note to exercise any right or remedy
accruing upon any Default or
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Event of Default shall impair any such right or remedy or constitute a waiver of
any such Default or Event of Default or an acquiescence therein. Every right and
remedy given by this Article Five or by law to the Trustee or to the Noteholders
may be exercised from time to time, and as often as may be deemed expedient, by
the Trustee or by the Noteholders, as the case may be.
Section 5.12. Control by Noteholders. If the Trustee is the Controlling
Party, the Holders of a majority of the Outstanding Amount of the Notes shall
have the right to direct the time, method and place of conducting any Proceeding
for any remedy available to the Trustee with respect to the Notes or exercising
any trust or power conferred on the Trustee; provided that:
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the terms of Section 5.04, any direction to
the Trustee to sell or liquidate the Trust Estate shall be by the
Holders of Notes representing not less than 100% of the Outstanding
Amount of the Notes;
(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Trustee elects to retain the Trust Estate pursuant to
such Section, then any direction to the Trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to
sell or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Trustee need not take any action that it determines, in its
sole discretion, might involve it in liability or might materially adversely
affect the rights of any Noteholders not consenting to such action.
Section 5.13. Waiver of Past Defaults. If an Insurer Default shall have
occurred and be continuing, the Holders of Notes of not less than a majority of
the Outstanding Amount of the Notes may waive any past Default or Event of
Default and its consequences except a Default (i) in payment of principal of or
interest on any of the Notes or (ii) in respect of a covenant or provision
hereof which cannot be modified or amended without the consent of the Holder of
each Note. In the case of any such waiver, the Issuer, the Trustee and the
Holders of the Notes shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court
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may in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit and that such court
may in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Trustee, (ii) any suit instituted by any Noteholder, or group of Noteholders, in
each case holding in the aggregate more than 10% of the Outstanding Amount of
the Notes or (iii) any suit instituted by any Noteholder for the enforcement of
the payment of principal of or interest on any Note on or after the respective
due dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
Section 5.15. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in and manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantages of any such law, and covenants that
it will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
Section 5.16. Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer. Any money or property collected by the Trustee shall be applied in
accordance with Section 5.06.
Section 5.17. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Seller and the Master Servicer as applicable, of each of their obligations to
the Issuer under or in connection with the Sale and Servicing Agreement in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and in the manner directed
by the Trustee, including the transmission of notices of default on the part of
the Seller or the Master Servicer thereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Seller or the Master Servicer of each of their obligations under the Sale and
Servicing Agreement.
(b) If the Trustee is the Controlling Party and if an Event of Default
has occurred and is continuing, the Trustee may, and at the direction (which
direction shall be in writing and may include a facsimile) of the Holders of
66 2/3% of the Outstanding Amount of the Notes shall exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller or the
Master Servicer under or in connection with the Sale and Servicing Agreement,
including the
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right or power to take any action to compel or secure performance or observance
by the Seller or the Master Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
Section 5.18. Claims Under Note Policy.
(a) In the event that the Trustee has received a Deficiency Notice with
respect to any Distribution Date pursuant to Section 5.02(c) of the Sale and
Servicing Agreement, the Trustee shall furnish to the Insurer no later than
12:00 p.m., New York City time, on the fourth Business Day prior to the related
Distribution Date a completed Notice of Claim in the amount of the shortfall in
amounts so available to pay the Note Interest Distributable Amount and the Note
Principal Distributable Amount with respect to such Distribution Date (the
amount of any such shortfall being hereinafter referred to as the "Note Policy
Claim Amount"). Amounts paid by the Insurer pursuant to a claim submitted under
this Section shall be deposited by the Trustee into the Note Distribution
Account for payment to Noteholders on the related Distribution Date.
(b) Any notice delivered by the Trustee to the Insurer pursuant to
Section 5.18(a) shall specify the Note Policy Claim Amount claimed under the
Note Policy and shall constitute a "Notice of Claim" under the Note Policy. In
accordance with the provisions of the Note Policy, the Insurer is required to
pay to the Trustee the Note Policy Claim Amount properly claimed thereunder by
12:00 p.m., New York City time, on the later of (i) the fourth Business Day
following receipt of the Notice of Claim, and (ii) the applicable Distribution
Date. Any payment made by the Insurer under the Note Policy shall be applied
solely to the payment of the Notes, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Noteholder any Note Policy Claim Amount from the Insurer and (ii) deposit the
same in the Note Distribution Account for distribution to Noteholders as
provided in Sections 3.01 or 5.02. Any and all Note Policy Claim Amounts
disbursed by the Trustee from claims made under the Note Policy shall not be
considered payment by the Trust or from the Spread Account with respect to such
Notes, and shall not discharge the obligations of the Trust with respect
thereto. The Insurer shall, to the extent it makes any payment with respect to
the Notes, become subrogated to the rights of the recipients of such payments to
the extent of such payments. Subject to and conditioned upon any payment with
respect to the Notes by or on behalf of the Insurer, the Trustee shall assign to
the Insurer all rights to the payment of interest or principal with respect to
the Notes which are then due for payment to the extent of all payments made by
the Insurer and the Insurer may exercise any option, vote, right, power or the
like with respect to the Notes to the extent that it has made payment pursuant
to the Note Policy. To evidence such subrogation, the Note Registrar shall note
the Insurer's rights as subrogee upon the register of Noteholders upon receipt
from the Insurer of proof of payment by the Insurer of any Note Interest
Distributable Amount or Note Principal Distributable Amount. The foregoing
subrogation shall in all cases be subject to the rights of the Noteholders to
receive all Scheduled Payments in respect of the Notes.
(d) The Trustee shall keep a complete and accurate record of all funds
deposited by the Insurer into the Note Distribution Account and the allocation
of such funds to payment of
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interest on and principal paid in respect of any Note. The Insurer shall have
the right to inspect such records at reasonable times upon one Business Day's
prior notice to the Trustee.
(e) The Trustee shall be entitled to enforce on behalf of the
Noteholders the obligations of the Insurer under the Note Policy.
Notwithstanding any other provision of this Indenture or any other Basic
Document, the Noteholders are not entitled to institute proceedings directly
against the Insurer.
Section 5.19. Preference Claims.
(a) In the event that the Trustee has received a certified copy of an
order of the appropriate court that any Note Interest Distributable Amount or
Note Principal Distributable Amount paid on a Note has been avoided in whole or
in part as a preference payment under applicable bankruptcy law, the Trustee
shall so notify the Insurer, shall comply with the provisions of the Note Policy
to obtain payment by the Insurer of such avoided payment, and shall, at the time
it provides notice to the Insurer, notify Holders of the Notes by mail that, in
the event that any Noteholder's payment is so recoverable, such Noteholder will
be entitled to payment pursuant to the Note Policy. The Trustee shall furnish to
the Insurer its records evidencing the payments of principal of and interest on
Notes, if any, which have been made by the Trustee and subsequently recovered
from Noteholders, and the dates on which such payments were made. Pursuant to
the Note Policy, the Insurer will make such payment on behalf of the Noteholder
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order (as such term is defined in the Note Policy) and not to the
Trustee or any Noteholder directly (unless a Noteholder has previously paid such
payment to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy, in which case the Insurer will make such payment to the Trustee for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer).
(b) To the extent that a Responsible Officer of the Trustee has actual
knowledge thereof, the Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action seeking the avoidance as a
preferential transfer under applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (a "Preference Claim") of any distribution made
with respect to the Notes. Each Holder, by its purchase of Notes, and the
Trustee hereby agree that so long as an Insurer Default shall not have occurred
and be continuing, the Insurer may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters relating to such
Preference Claim including, without limitation, (i) the direction of any appeal
of any order relating to any Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such appeal at the expense
of the Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as set forth in
Section 5.18(c), the Insurer shall be subrogated to, and each Noteholder and the
Trustee hereby delegate and assign, to the fullest extent permitted by law, the
rights of the Trustee and each Noteholder in the conduct of any proceeding with
respect to a Preference Claim, including, without limitation, all rights of any
party to an adversary proceeding action with respect to any court order issued
in connection with any such Preference Claim. In addition, for so long as the
Insurer guarantees amounts owing under the RIC and has not defaulted in the
making of any payment required to be made by it pursuant to such guaranty, the
Insurer shall have the right to initiate and control a proceeding against the
obligor under the
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RIC but only to the extent such proceeding relates to the amounts so guaranteed
and no settlement of any other proceeding or claim that would adversely affect
the Insurer's rights to recover such amounts shall be affected without the prior
written consent of the Insurer.
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ARTICLE SIX
THE TRUSTEE
Section 6.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and in the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs; provided, however, that if the Trustee shall assume the duties of the
Master Servicer pursuant to Section 3.07(e), the Trustee in performing such
duties shall use the degree of care and skill customarily exercised by a prudent
institutional servicer with respect to automobile retail installment sales
contracts that it services for itself or others.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; however, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture and the other Basic Documents to which the Trustee is
a party.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of Section
6.01(b);
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
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(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayments of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) The Trustee shall, upon one Business Day's prior notice to the
Trustee, so long as no Insurer Default shall have occurred and be continuing, at
the expense of the Trust, and if an Insurer Default shall have occurred and be
continuing, at the expense of the Insurer, permit any representative of the
Insurer, during the Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Trustee relating to the Notes,
to make copies and extracts therefrom and to discuss the Trustee's affairs and
actions, as such affairs and actions relate to the Trustee's duties with respect
to the Notes, with the Trustee's officers and employees responsible for carrying
out the Trustee's duties with respect to the Notes.
(j) The Trustee shall, and hereby agrees that it will (i) perform all
of the obligations and duties required of it under the Sale and Servicing
Agreement and (ii) hold the Note Policy in trust, and will hold any proceeds of
any claim on the Note Policy in trust solely for the use and benefit of the
Noteholders.
(k) Except as otherwise required or permitted by the TIA, nothing
contained herein shall be deemed to authorize the Trustee to engage in any
business operations or any activities other than those set forth in this
Indenture. Specifically, the Trustee shall have no authority to engage in any
business operations, acquire any assets other than those specifically included
in the Trust Estate under this Indenture or otherwise vary the assets held by
the Trust. Similarly, the Trustee shall have no discretionary duties other than
performing those ministerial acts set forth above necessary to accomplish the
purpose of this Trust as set forth in this Indenture.
Section 6.02. Rights of Trustee.
(a) Except as otherwise provided in Section 6.02(g) and the second
succeeding sentence, the Trustee may conclusively rely and shall be protected in
acting upon or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, note,
direction, demand, election or other paper or document believed by it to be
genuine and to have been signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the document. Notwithstanding
the foregoing, the Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of this Indenture, shall examine them to determine whether they
comply as to form to the requirements of this Indenture.
(b) Other than with respect to actions required to be taken by the
Trustee pursuant to Section 5.18 and 5.19, before the Trustee acts or refrains
from acting, it may require an Officer's
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Certificate (with respect to factual matters) or an Opinion of Counsel, as
applicable. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on the Officer's Certificate or Opinion of
Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the Notes
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder in good faith
and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall be under no obligation to institute, conduct or
defend any litigation under this Indenture or in relation to this Indenture, at
the request, order or direction of any of the Holders of Notes or the
Controlling Party, pursuant to the provisions of this Indenture, unless such
Holders or the Controlling Party shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities that may be
incurred therein or thereby; provided, however, that the Trustee shall, upon the
occurrence of an Event of Default (that has not been cured), exercise the rights
and powers vested in it by this Indenture with reasonable care and skill.
(g) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by the Insurer (so long as no
Insurer Default shall have occurred and be continuing) or (if an Insurer Default
shall have occurred and be continuing) by the Holders of Notes evidencing not
less than 25% of the Outstanding Amount of the Notes; provided, however, that if
the payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture or the Sale and Servicing
Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
each such investigation shall be paid by the Person making such request, or, if
paid by the Trustee, shall be reimbursed by the Person making such request upon
demand.
Section 6.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee is required to comply with Sections 6.11 and 6.12.
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Section 6.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture, the Trust Estate or the Notes, it shall not be accountable for
the Issuer's use of the proceeds from the Notes, and it shall not be responsible
for any statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Trustee's
certificate of authentication.
Section 6.05. Notice of Defaults. If a Default occurs and is continuing
and if it is known to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder and the Insurer notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the redemption of Notes),
the Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
Section 6.06. Reports by Trustee to Holders. The Trustee shall deliver
to each Noteholder such information as may be required to enable such holder to
prepare its federal and state income tax returns.
Section 6.07. Compensation and Indemnity. The Issuer shall, or shall
cause the Administrator to, pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be limited
by any law on compensation of a trustee of an express trust. The Issuer shall,
or shall cause the Administrator to, reimburse the Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuer shall, or shall
cause the Administrator to, indemnify the Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Issuer and the Administrator promptly of
any claim for which it may seek indemnity. Failure by the Trustee to so notify
the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder. The Issuer shall, or shall cause the
Administrator to, defend any such claim, and the Trustee may have separate
counsel and the Issuer shall, or shall cause the Administrator to, pay the fees
and expenses of such counsel. Neither the Issuer nor the Administrator need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own willful misconduct, negligence
or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 5.01(iv) or (v)
with respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Section 6.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Issuer, the Master Servicer and the Insurer. The
Issuer, may, with the consent of the Insurer, and, at the request of the Insurer
shall, remove the Trustee, unless an Insurer Default shall have occurred and be
continuing) if:
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(i) the Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Trustee in an involuntary case or proceeding under federal or state
banking or bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other
similar law, shall have entered a decree or order granting relief or
appointing a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator (or similar official) for the Trustee or for
any substantial part of the Trustee's property, or ordering the
winding-up or liquidation of the Trustee's affairs, provided any such
decree or order shall have continued unstayed and in effect for a
period of 30 consecutive days;
(iii) the Trustee commences a voluntary case under any federal
or state banking or bankruptcy laws, as now or hereafter constituted,
or any other applicable federal or state bankruptcy, insolvency or
other similar law, or consents to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
conservator, sequestrator or other similar official for the Trustee or
for any substantial part of the Trustee's property, or makes any
assignment for the benefit of creditors or fails generally to pay its
debts as such debts become due or takes any corporate action in
furtherance of any of the foregoing; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Issuer shall promptly appoint a successor
Trustee reasonably acceptable to the Insurer (so long as an Insurer Default
shall not have occurred and be continuing). If the Issuer fails to appoint such
a successor Trustee, the Insurer may appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The Issuer or the successor Trustee shall mail a notice of its
succession to Noteholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee.
If a successor Trustee does not take office within 45 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Insurer
(provided that no Insurer Default shall have occurred and be continuing), the
Issuer or the Holders of a majority of the Outstanding Amount of the Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to the provisions of this Section shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
this Section and payment of all fees and expenses owed to the outgoing Trustee.
Notwithstanding the replacement of the Trustee
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pursuant to this Section, the retiring Trustee shall be entitled to payment or
reimbursement of such amounts as such Person is entitled pursuant to Section
6.07.
Section 6.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee; provided, that such corporation or
banking association shall be otherwise qualified and eligible under Section
6.11. The Trustee shall provide the Insurer and each Rating Agency prompt notice
of any such transaction.
In case at the time such successor by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
Section 6.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Trust Estate may at the time be located, the Trustee and the
Administrator acting jointly shall have the power and may execute and deliver
all instruments to appoint one or more Persons to act as a co-trustee or
co-trustees, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders and the Insurer, such title to
the Trust Estate, or any part hereof, and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the Trustee
and the Administrator may consider necessary or desirable. If the Administrator
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor Trustee under Section 6.11 and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
the Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be
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exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Trustee and the Administrator may at any time accept
the resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of co-appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Indenture,
specifically including every provision relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee and a copy thereof given to the Administrator.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Indenture on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. Notwithstanding anything to the contrary in this Indenture,
the appointment of any separate trustee or co-trustee shall not relieve the
Trustee of its obligations and duties under this Indenture.
Section 6.11. Eligibility; Disqualification.
(a) The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall provide copies of such reports to the Insurer upon
request. The Trustee shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities of the Issuer are
outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
(b) If the long term debt rating of the Trustee shall not be at least
Baa3 from Moody's and BBB- from Standard & Poor's, the Rating Agencies shall be
given notice of such lower long-term debt rating.
Section 6.12. Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
Section 6.13. Representations and Warranties of Trustee. The Trustee
hereby makes the following representations and warranties on which the Issuer
and Noteholders shall rely:
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(i) the Trustee is a corporation duly organized, validly
existing and in good standing under the laws of its place of
incorporation; and
(ii) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Indenture and shall have taken all
necessary action to authorize the execution, delivery and performance
by it of this Indenture.
Section 6.14. Pennsylvania Motor Vehicle Sales Finance Act Licenses.
The Trustee shall take such action as, in its reasonable judgment, shall be
necessary to maintain the effectiveness of all licenses required under the
Pennsylvania Motor Vehicle Sales Finance Act in connection with this Indenture
and the transactions contemplated hereby until the lien and security interest of
this Indenture shall no longer be in effect in accordance with the terms hereof.
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ARTICLE SEVEN
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01. Issuer to Furnish Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee (i)
not more than five days after the earlier of (a) each Record Date and (b) three
months after the last Record Date, a list, in such form as the Trustee may
reasonably require, of the names and addresses of the Holders of Notes as of
such Record Date and (ii) at such other times as the Trustee may request in
writing, within 30 days after receipt by the Issuer of any such request, a list
of similar form and content as of a date not more than ten days prior to the
time such list is furnished; provided, however, that so long as the Trustee is
the Note Registrar, no such list shall be required to be furnished. The Trustee
or, if the Trustee is not the Note Registrar, the Issuer shall furnish to the
Insurer in writing at such times as the Insurer may reasonably request a copy of
the list.
Section 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 7.01 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA Section 312(c).
Section 7.03. Reports by Issuer.
(a) The Issuer shall:
(i) file with the Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Issuer may
be required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act;
(ii) file with the Trustee and the Commission in accordance
with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Trustee (and the Trustee shall transmit by
mail to all Noteholders described in TIA Section 313(c)) such summaries
of any information, documents and
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reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
Section 7.04. Reports by Trustee. To the extent that any of the events
described in TIA Section 313(a) shall have occurred, the Trustee shall, within
60 days after each December 15 beginning with December 15, 1999, mail to the
Insurer and each Noteholder as required by TIA Section 313(c) a brief report
dated as of such date that complies with TIA Section 313(a). The Trustee also
shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission and with each stock exchange, if
any, on which the Notes are listed and of which listing the Trustee has been
informed. The Issuer shall notify the Trustee if and when the Notes are listed
on any stock exchange.
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ARTICLE EIGHT
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01. Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Trustee pursuant to this Indenture. The Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Trust Estate, the Trustee may take such action as may be appropriate to enforce
such payment or performance, including the institution and prosecution of
appropriate Proceedings. Any such action shall be without prejudice to any right
to claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article Five.
Section 8.02. Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the Master
Servicer to establish and maintain, in the name of the Trustee, for the benefit
of the Noteholders and the Certificateholders, the Trust Accounts as provided in
Section 5.01 of the Sale and Servicing Agreement.
(b) All Net Collections with respect to each Due Period will be
deposited in the Collection Account as provided in Section 5.02 of the Sale and
Servicing Agreement. On the Business Day immediately preceding each Distribution
Date, all amounts required to be deposited in the Note Distribution Account with
respect to the preceding Due Period pursuant to Section 5.05 of the Sale and
Servicing Agreement will be transferred from the Collection Account and/or the
Spread Account to the Note Distribution Account.
(c) On each Distribution Date, the Trustee shall distribute all amounts
on deposit in the Note Distribution Account in respect of such Distribution Date
to Noteholders in respect of the Notes to the extent of amounts due and unpaid
on the Notes for principal and interest as follows:
(i) to each Class of Noteholders, accrued and unpaid interest
on the outstanding principal amount of the related Class of Notes at
the related Interest Rate;
(ii) to the Class A-1 Noteholders in reduction of the
Outstanding Amount of the Class A-1 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-1
Notes is reduced to zero;
(iii) to the Class A-2 Noteholders in reduction of the
Outstanding Amount of the Class A-2 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-2
Notes is reduced to zero;
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(iv) to the Class A-3 Noteholders in reduction of the
Outstanding Amount of the Class A-3 Notes, the Note Principal
Distributable Amount until the Outstanding Amount of the Class A-3
Notes is reduced to zero; and
(d) If on any Distribution Date there will be insufficient funds in the
Note Distribution Account to make any payment required to be made pursuant to
Section 8.02(c) or 8.02(d), the Trustee will make a claim under the Note Policy
as described in Section 5.18.
Section 8.03. General Provisions Regarding Accounts.
(a) So long as no Default or Event of Default shall have occurred and
be continuing, all or a portion of the funds in the Trust Accounts other than
the Holding Account shall be invested in Eligible Investments and reinvested by
the Trustee upon receipt of an Issuer Order, subject to the provisions of
Section 5.01(b) of the Sale and Servicing Agreement. Except as otherwise
provided in Section 5.01(b) of the Sale and Servicing Agreement, all income or
other gain from investments of monies deposited in such Trust Accounts shall be
deposited by the Trustee in the Collection Account, and any loss resulting from
such investments shall be charged to the related Trust Account. The Issuer will
not direct the Trustee to make any investment of any funds or to sell any
investment held in any of the Trust Accounts unless the security interest
Granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Trustee to
make any such investment or sale, if requested by the Trustee, the Issuer shall
deliver to the Trustee an Opinion of Counsel, acceptable to the Trustee, to such
effect.
(b) Subject to Section 6.01(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as Trustee, in accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 11:00 a.m., New
York City time (or such other time as may be agreed by the Issuer and Trustee),
on any Business Day, (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes have not been declared due
and payable pursuant to Section 5.02 or (iii) if such Notes have been declared
due and payable following an Event of Default but amounts collected or
receivable from the Trust Estate are being applied in accordance with Section
5.05 as if there had not been such a declaration, then the Trustee shall, to the
fullest extent practicable, invest and reinvest funds in the Trust Accounts in
one or more Eligible Investments.
Section 8.04. Release of Trust Estate.
(a) Subject to the payment of its fees and expenses pursuant to Section
6.07, the Trustee may, and when required by the provisions of this Indenture
shall, execute instruments to release property from the lien of this Indenture,
or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
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No party relying upon an instrument executed by the Trustee as provided in this
Article shall be bound to ascertain the Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Trustee shall, at such time as there are no Notes Outstanding
and all sums due the Trustee pursuant to Section 6.07 have been paid, release
any remaining portion of the Trust Estate that secured the Notes from the lien
of this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.04(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.01.
Section 8.05. Opinion of Counsel. The Trustee shall receive at least
seven days' notice when requested by the Issuer to take any action pursuant to
Section 8.04(a), accompanied by copies of any instruments involved, and the
Trustee shall also require, as a condition to such action, an Opinion of
Counsel, in form and substance satisfactory to the Trustee, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Trustee in connection with any such action.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with the
consent of the Insurer (unless an Insurer Default shall have occurred and be
continuing) and with prior notice to each Rating Agency, the Issuer and the
Trustee, when authorized by an Issuer Order, and the other parties hereto at any
time and from time to time, may enter into one or more indentures supplemental
hereto (which shall conform to the provisions of the TIA as in force at the date
of the execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey or confirm unto the Trustee any property subject or required to
be subjected to the lien created by this Indenture, or to subject to
the lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or the other Basic Documents or to make any other provisions
with respect to matters or questions arising under this Indenture or in
any supplemental indenture that shall not be inconsistent with the
provisions of this Indenture; provided that such action shall not
adversely affect the interests of the Holders of the Notes or result in
the creation of a new security;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article Six; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may he expressly required by the TIA.
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The Trustee is hereby authorized to join in the exemption of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with the
consent of the Insurer (unless an Insurer Default shall have occurred and be
continuing) and with prior notice to each Rating Agency, enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to,
or changing in any manner or eliminating any of the provisions of, this
Indenture or of modifying in any manner the rights of the Holders of the Notes
under this Indenture; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Noteholder or result in the creation of a new security.
Section 9.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to each Rating Agency, with the consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) and with the consent of the
Holders of not less than a majority of the Outstanding Amount of the Notes, by
Act of such Holders delivered to the Issuer and the Trustee, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Holders of
the Notes under this Indenture; provided, however, that, subject to the express
rights of the Insurer under the Basic Documents, no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Note affected
thereby:
(i) change the date of payment of any installment of principal
of or interest on any Note, or reduce the principal amount thereof, the
interest rate thereon or the Redemption Price with respect thereto,
change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Trust Estate to
payment of principal of or interest on the Notes, or change any place
of payment where, or the coin or currency in which, any Note or the
interest thereon is payable, or impair the right to institute suit for
the enforcement of the provisions of this Indenture requiring the
application of funds available therefor, as provided in Article Five,
to the payment of any such amount due on the Notes on or after the
respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the
Notes, the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii) modify or alter the provisions of the second proviso to
the definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the
Notes required to direct the Trustee to sell or liquidate the Trust
Estate pursuant to Section 5.04 or amend
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the provisions of this Article which specify the percentage of the
Outstanding Amount of the Notes required to amend this Indenture or the
other Basic Documents;
(v) modify any provision of this Section except to increase
any percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Basic Documents cannot be
modified or waived without the consent of the Holder of each
Outstanding Note affected thereby; or
(vi) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part
of the Trust Estate or, except as otherwise permitted or contemplated
herein, terminate the lien created by this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the
security provided by the lien created by this Indenture, and further
provided that any such action will not, as evidenced by an Opinion of
Counsel satisfactory to the Trustee, result in the creation of a new
security.
The Trustee may in its discretion determine whether or not any Notes
would be affected by any supplemental indenture and any such determination shall
be conclusive upon the Holders of all Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Trustee shall not be liable for any
such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Trustee shall mail to the Holders of the
Notes to which such amendment or supplemental indenture relates a notice setting
forth in general terms the substance of such supplemental indenture. Any failure
of the Trustee to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture.
Section 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
Section 9.04. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such modifications
and amendments,
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and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
Section 9.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
Section 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
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ARTICLE TEN
REDEMPTION OF NOTES
Section 10.01. Redemption.
(a) In the event that the Seller pursuant to Section 9.01(a) of the
Sale and Servicing Agreement purchases the corpus of the Trust, the Notes are
subject to redemption in whole, but not in part, on the Distribution Date on
which such repurchase occurs, for a purchase price equal to the Redemption
Price; provided, however, that the Issuer has available funds sufficient to pay
the Redemption Price. The Seller, the Master Servicer or the Issuer shall
furnish the Insurer and each Rating Agency notice of such redemption. If the
Notes are to be redeemed pursuant to this Section 10.01(a), the Master Servicer
or the Issuer shall furnish notice of such election to the Trustee not later
than 20 days prior to the Redemption Date and the Issuer shall deposit with the
Trustee in the Note Distribution Account the Redemption Price of the Notes to be
redeemed whereupon all such Notes shall be due and payable on the Redemption
Date upon the furnishing of a notice complying with Section 10.02 to each Holder
of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 5.02(b) of this Indenture, the proceeds of such sale shall be
distributed as provided in Section 5.06. If amounts are to be paid to
Noteholders pursuant to this Section 10.01(b), the Master Servicer or the Issuer
shall, to the extent practicable, furnish notice of such event to the Trustee
not later than 20 days prior to the Redemption Date whereupon all such amounts
shall be payable on the Redemption Date.
Section 10.02. Form of Redemption Notice.
(a) Notice of redemption under Section 10.01(a) shall be given by the
Trustee by first-class mail, postage prepaid, mailed not less than 20 days prior
to the applicable Redemption Date to each Holder of Notes, as of the close of
business on the Record Date preceding the applicable Redemption Date, at such
Holder's address appearing in the Note Register. In addition, the Administrator
shall notify the Rating Agencies upon the redemption of any Class of Notes,
pursuant to Section 1(a)(i) of the Administration Agreement.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02); and
(iv) that on the Redemption Date, the Redemption Price will
become due and payable upon each Note and that interest thereon shall
cease to accrue from and after the Redemption Date.
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Notice of redemption of the Notes shall be given by the Trustee in the
name and at the expense of the Issuer. Failure to give notice of redemption, or
any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Section 10.01(b) is not required
to be given to Noteholders.
Section 10.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
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ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Trustee to
take any action under any provision of this Indenture, the Issuer shall furnish
to the Trustee (i) an Officer's Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section. Notwithstanding the foregoing, in the case of any such application
or request as to which the furnishing of such documents is specifically required
by any provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Trustee that is to be made the basis for the
release of any property subject to the lien created by this Indenture,
the Issuer shall, in addition to any obligation imposed in Section
11.01(a) or elsewhere in this Indenture, furnish to the Trustee and the
Insurer (so long as no Insurer Default shall have occurred and be
continuing) an Officer's Certificate certifying or stating the opinion
of the signer thereof such certificate as to the fair value (within 90
days of such deposit) to the Issuer of the Collateral or other property
or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Trustee
and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause (i)
above, the Issuer shall also deliver to the Trustee and the
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Insurer an Independent Certificate as to the same matters, if the fair
value to the Issuer of the property to be so deposited and of all other
such property made the basis of any such withdrawal or release since
the commencement of the then-current fiscal year of the Issuer, as set
forth in the Officer's Certificates delivered pursuant to clause (i)
above and this clause (ii), is 10% or more of the Outstanding Amount of
the Notes, but such Officer's Certificate need not be furnished with
respect to any property so deposited, if the fair value thereof to the
Issuer as set forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the Outstanding Amount of the
Notes.
(iii) Other than with respect to any release described in
clause (A) or (B) of Section 11.01(b)(v), whenever any property or
securities are to be released from the lien created by this Indenture,
the Issuer shall also furnish to the Trustee and the Insurer (so long
as no Insurer Default shall have occurred and be continuing) an
Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within 90 days of such
release) of the property or securities proposed to be released and
stating that in the opinion of such person the proposed release will
not impair the security created by this Indenture in contravention of
the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee
and the Insurer an Officer's Certificate certifying or stating the
opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Trustee and the
Insurer an Independent Certificate as to the same matters if the fair
value of the property or securities and of all other property (other
than property described in clauses (A) or (B) of Section 11.01(b)(v))
or securities released from the lien created by this Indenture since
the commencement of the then current fiscal year, as set forth in the
Officer's Certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Outstanding Amount of the Notes, but
such Officer's Certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set
forth in the related Officer's Certificate is less than $25,000 or less
than one percent of the then Outstanding Amount of the Notes.
Notwithstanding Section 2.12 or any other provision of this Section,
the Issuer may, without compliance with the other provisions of this Section,
(A) collect, liquidate, sell or otherwise dispose of the Contracts as and to the
extent permitted or required by the Basic Documents, (B) make cash payments out
of the Trust Accounts as and to the extent permitted or required by the Basic
Documents, so long as the Issuer shall deliver to the Trustee every six months,
commencing April 15, 2000, an Officer's Certificate stating that all the
dispositions of Collateral described in clauses (A) or (B) that occurred during
the preceding six calendar months were in the ordinary course of the Issuer's
business and that the proceeds thereof were applied in accordance with the Basic
Documents.
Section 11.02. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to
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other matters, and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Master Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Master Servicer, the
Seller or the Issuer, unless such officer or counsel knows, or in the exercise
of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute to or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of the Issuer's compliance with any term hereof, it is intended that
the truth and accuracy, at the time of the granting of such application or at
the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Trustee's right to rely upon the truth and accuracy of
any statement or opinion contained in any such document as provided in Article
Six.
Section 11.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Trustee and the Issuer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Trustee deems
sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
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(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
Section 11.04. Notices, etc., to Trustee, Issuer, Insurer and Rating
Agencies.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to or with the Trustee at its Corporate Trust
Office;
(ii) the Issuer by the Trustee or by any Noteholder shall be
sufficient for every purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the Issuer addressed to: WFS Financial 1999-C
Owner Trust, in care of Chase Manhattan Bank Delaware, as Owner
Trustee, 1201 Market Street, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration Department, with a copy to: The Chase
Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, New York
10001, Attention: Structured Finance Services (ABS), or at any other
address furnished in writing to the Trustee by the Issuer; or
(iii) the Insurer by the Issuer or the Trustee shall be
sufficient for any purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the recipient as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Telex No.: (212) 688-3101
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518
(212) 339-3529
(In each case in which notice or other communication to the Insurer refers to an
Event of Default, a claim on the Note Policy or with respect to which failure on
the part of the Insurer to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication should also be
sent to the attention of the General Counsel and the Head --Financial Guaranty
Group "URGENT MATERIAL ENCLOSED.")
(b) Notices required to be given to the Rating Agencies by the Issuer,
the Trustee or the Owner Trustee shall be in writing, personally delivered, sent
by facsimile transmission and
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confirmed or mailed by overnight service, to (i) in the case of Moody's, at the
following address: Moody's Investors Service, Inc., ABS Monitoring Department,
99 Church Street, New York, New York 10007 and (ii) in the case of Standard &
Poor's, at the following address: Standard & Poor's, 26 Broadway (20th Floor),
New York, New York 10004, Attention: Asset Backed Surveillance Department; or as
to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
Section 11.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a conclusion precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event of Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default
Section 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices. The Issuer will furnish to the Trustee a copy of each such agreement
and the Trustee will cause payments to be made and notices to be given in
accordance with such agreements.
Section 11.07. Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included herein unless
expressly excluded by
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this Indenture) are a part of and govern this Indenture, whether or not
physically contained herein.
Section 11.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 11.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors, co-trustees and agents.
Section 11.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
Section 11.11. Benefits of Indenture. The Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture so long as no Insurer Default shall have occurred
and be continuing. Nothing in this Indenture or in the Notes, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, and the Noteholders, and any other party secured
hereunder, and any other Person with an ownership interest in any part of the
Trust Estate, any benefit or any legal or equitable right, remedy or claim under
this Indenture. The Insurer may disclaim any of its rights and powers under this
Indenture, but not its duties and obligations under the Note Policy, upon
delivery of a written notice to the Trustee.
Section 11.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.13. Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS INDENTURE SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, EXCEPT THAT THE DUTIES OF THE TRUSTEE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 11.14. Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee and the Insurer) to the effect that such recording is necessary
either for the protection of the Noteholders or any other Person secured
68
<PAGE> 75
hereunder or for the enforcement of any right or remedy granted to the Trustee
under this Indenture.
Section 11.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Trustee on the Notes or under this Indenture or any certificate or other
writing delivered in connection herewith or therewith, against (i) the Trustee
or the Owner Trustee in its individual capacity, (ii) any owner of a beneficiary
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director, employee or agent of the Trustee or the Owner Trustee in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Trustee or of any successor or assign of the Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Articles Six, Seven and Eight of
the Trust Agreement.
Section 11.17. No Petition. The parties hereto, by entering into this
Indenture, and each Noteholder, by accepting a Note or a beneficial interest in
a Note, hereby covenant and agree that they will not at any time institute
against the Seller or the Issuer, or join in any institution against the Seller
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the other Basic Documents.
Section 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee or of the Insurer,
during the Issuer's normal business hours, to examine all the books of account,
records, reports and other papers of the Issuer, to make copies and extracts
therefrom, to cause such books to be audited by independent certified public
accountants, and to discuss the Issuer's affairs, finances and accounts with the
Issuer's officers, employees and independent certified public accountants, all
at such reasonable times and as often as may be reasonably requested, the
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Trustee may reasonably determine that such disclosure is
consistent with its obligations hereunder.
Section 11.19. Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by Chase Manhattan Bank Delaware not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall Chase Manhattan Bank Delaware in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of any duties
69
<PAGE> 76
or obligations of the Issuer hereunder, the Owner Trustee shall be subject to,
and entitled to the benefits of, the terms and provisions of Articles Six, Seven
and Eight of the Trust Agreement.
70
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
WFS FINANCIAL 1999-C OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE, not in its
individual capacity but solely on behalf of
the Issuer as Owner Trustee under the Trust
Agreement
By:
-------------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Trustee
By:
-------------------------------------------
Name:
Title:
<PAGE> 78
STATE OF ____________ )
) ss
COUNTY OF ___________ )
On before me,
-------------------- --------------------------------------
[insert date] [Here insert name and title of notary]
personally appeared
----------------------------------------------------------,
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within
instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
------------------
<PAGE> 79
STATE OF ____________ )
) ss
COUNTY OF ___________ )
On before me,
---------------- -----------------------------------------------
[insert date] [Here insert name and title of notary]
personally appeared ,
------------------------------------------------------------
[ ] personally known to me, or
[ ] proved to me on the basis of satisfactory evidence to be the
person(s) whose name(s) is/are subscribed to the within
instrument,
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ties), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which such person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
Signature [Seal]
--------------------------
<PAGE> 80
SCHEDULE A
SCHEDULE OF CONTRACTS
Omitted -- Schedules of Contracts on file at the offices of the Seller, the
Master Servicer and the Owner Trustee.
SA-1
<PAGE> 81
EXHIBIT A
FORM OF SALE AND SERVICING AGREEMENT
A-1
<PAGE> 82
EXHIBIT B
FORM OF NOTE DEPOSITORY AGREEMENT
B-1
<PAGE> 83
EXHIBIT C
FORM OF CLASS A-1 NOTE
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 1999-C OWNER TRUST
[_____%] AUTO RECEIVABLE BACKED NOTE, CLASS A-1
REGISTERED $224,100,000
No. R-A1 CUSIP NO. ______ [___]
WFS Financial 1999-C Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Two Hundred Twenty Four Million One Hundred Thousand Dollars
($224,100,000), payable to the extent described in the Indenture referred to on
the reverse hereof on each Distribution Date; provided, however, that the entire
unpaid principal amount of this Note shall be payable on the earlier of ________
20, 200_ (the "Class A-1 Final Distribution Date") and the Redemption Date, if
any, selected pursuant to the Indenture.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in the case of
the first Distribution Date or if no interest has yet been paid, subject to
certain limita-
C-1
<PAGE> 84
tions contained in the Indenture. Interest on this Note will accrue for each
Distribution Date from and including the most recent Distribution Date on which
interest has been paid to but excluding such Distribution Date or, in the case
of the first Distribution Date or if no interest has yet been paid, from October
1, 1999. The Issuer shall pay interest on overdue installments of interest at
the Class A-1 Interest Rate to the extent lawful. Interest will be computed on
the basis of a 360-day year and the actual number of days elapsed since the
immediately preceding Distribution Date. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Financial Security Assurance Inc.
(the "Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payment of the Note Interest Distributable Amount and the Note Principal
Distributable Amount on each Distribution Date, all as more fully set forth in
the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: _________, 1999 WFS FINANCIAL 1999-C OWNER TRUST
By: CHASE MANHATTAN BANK
DELAWARE,
not in its individual capacity but
solely on behalf of the Issuer
as Owner Trustee, under the
Trust Agreement
By:
-----------------------------------------
Name:
Title:
C-2
<PAGE> 85
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but solely as Trustee
By:
------------------------------------------------
Authorized Signatory
C-3
<PAGE> 86
[REVERSE OF CLASS A-1 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its [_____]% Auto Receivable Backed Notes, Class A-1 (the "Class
A-1 Notes"), all issued under an Indenture, dated as of October 1, 1999 (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal payable on the Class A-1 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-1 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-1 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-1 Notes shall be made pro rata
to the Class A-1 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
C-4
<PAGE> 87
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of the Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 5% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
C-5
<PAGE> 88
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
C-6
<PAGE> 89
EXHIBIT D
FORM OF CLASS A-2 NOTE
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES TO
THE EXTENT DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 1999-C OWNER TRUST
_____% AUTO RECEIVABLE BACKED NOTE, CLASS A-2
REGISTERED $149,425,000
No. R-A2 CUSIP NO. _____- ___
WFS Financial 1999-C Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of One Hundred Forty Nine Million Four Hundred Twenty Five
Thousand ($149,425,000), payable to the extent described in the Indenture
referred to on the reverse hereof on each Distribution Date; provided, however,
that the entire unpaid principal amount of this Note shall be payable on the
earlier of _____ 20, 200_ (the "Class A-2 Final Distribution Date") and the
Redemption Date, if any, selected pursuant to the Indenture. No payments of
principal of the Class A-2 Notes shall be made until the principal amount of the
Class A-1 Notes has been reduced to zero.
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect
D-1
<PAGE> 90
to all payments of principal made on the preceding Distribution Date), or on the
Closing Date in the case of the first Distribution Date or if no interest has
yet been paid, subject to certain limitations contained in the Indenture.
Interest on this Note will accrue for each Distribution Date from and including
the most recent Distribution Date on which interest has been paid to but
excluding such Distribution Date or, in the case of the first Distribution Date
or if no interest has yet been paid, from October 1, 1999. The Issuer shall pay
interest on overdue installments of interest at the Class A-2 Interest Rate to
the extent lawful. Interest will be computed on the basis of a 360-day year and
the actual number of days elapsed since the immediately preceding Distribution
Date. Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Financial Security Assurance Inc.
(the "Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payment of the Note Interest Distributable Amount and the Note Principal
Distributable Amount on each Distribution Date, all as more fully set forth in
the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
D-2
<PAGE> 91
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: _______ __, 1999 WFS FINANCIAL 1999-C OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but
solely on behalf of the Issuer
as Owner Trustee, under the Trust Agreement
By:
--------------------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but solely as Trustee,
By:
--------------------------------------------------
Authorized Signatory
D-3
<PAGE> 92
[REVERSE OF CLASS A-2 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its _____% Auto Receivable Backed Notes, Class A-2 (the "Class A-2
Notes"), all issued under an Indenture, dated as of October 1, 1999 (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal payable on the Class A-2 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-2 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-2 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-2 Notes shall be made pro rata
to the Class A-2 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
D-4
<PAGE> 93
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of the Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 5% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
D-5
<PAGE> 94
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
D-6
<PAGE> 95
EXHIBIT E
FORM OF CLASS A-3 NOTE
THIS NOTE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A-1 NOTES
AND THE CLASS A-2 NOTES AS DESCRIBED IN THE INDENTURE REFERRED TO HEREIN.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN FULL ON THE DATE SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
WFS FINANCIAL 1999-C OWNER TRUST
_____% AUTO RECEIVABLE BACKED NOTE, CLASS A-3
REGISTERED $73,975,000
No. R-A3 CUSIP NO. 928951 ___
WFS Financial 1999-C Owner Trust, a business trust organized and
existing under the laws of the State of Delaware (the "Issuer"), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Seventy Three Million Nine Hundred Seventy Five Thousand
($73,975,000), payable to the extent described in the Indenture referred to on
the reverse hereof on each Distribution Date; provided, however, that the entire
unpaid principal amount of this Note shall be payable on the earlier of ______
20, 200_ (the "Class A-3 Final Distribution Date") and the Redemption Date, if
any, selected pursuant to the Indenture. No payments of principal of the Class
A-3 Notes shall be made until the principal amount of the Class A-1 Notes and
the Class A-2 Notes has been reduced to zero.
F-1
<PAGE> 96
The Issuer will pay interest on this Note at the rate per annum shown
above on each Distribution Date until the principal of this Note is paid or made
available for payment, on the principal amount of this Note outstanding on the
preceding Distribution Date (after giving effect to all payments of principal
made on the preceding Distribution Date), or on the Closing Date in the case of
the first Distribution Date or if no interest has yet been paid, subject to
certain limitations contained in the Indenture. Interest on this Note will
accrue for each Distribution Date from and including the most recent
Distribution Date on which interest has been paid to but excluding such
Distribution Date or, in the case of the first Distribution Date or if no
interest has yet been paid, from October 1, 1999. The Issuer shall pay interest
on overdue installments of interest at the Class A-3 Interest Rate to the extent
lawful. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Such principal of and interest on this Note shall be paid
in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
The Notes are entitled to the benefits of a financial guaranty
insurance policy (the "Note Policy") issued by Financial Security Assurance Inc.
(the "Insurer"), pursuant to which the Insurer has unconditionally guaranteed
payment of the Note Interest Distributable Amount and the Note Principal
Distributable Amount on each Distribution Date, all as more fully set forth in
the Indenture.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
F-2
<PAGE> 97
IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an Authorized Officer, as set forth below.
Date: __________ __, 1999 WFS FINANCIAL 1999-C OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but solely on
behalf of the Issuer
as Owner Trustee, under the Trust Agreement
By:
-------------------------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY,
not in its individual capacity but solely as Trustee
By:
-------------------------------------------------
Authorized Signatory
F-3
<PAGE> 98
[REVERSE OF CLASS A-3 NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its _____% Auto Receivable Backed Notes, Class A-3 (the "Class A-3
Notes"), all issued under an Indenture, dated as of October 1, 1999 (the
"Indenture"), between the Issuer and Bankers Trust Company, as trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the respective rights and obligations
thereunder of the Issuer, the Insurer, the Trustee and the Holders of the Notes.
The Notes are subject to all terms of the Indenture. All terms used in this Note
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in or pursuant to the Indenture, as so supplemented or
amended.
The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
(collectively, the "Notes") are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal payable on the Class A-3 Notes will be paid on each
Distribution Date in the amount specified in the Indenture and in the Sale and
Servicing Agreement. As described above, the entire unpaid principal amount of
this Note will be payable on the earlier of the Class A-3 Final Distribution
Date and the Redemption Date, if any, selected pursuant to the Indenture.
Notwithstanding the foregoing, under certain circumstances, the entire unpaid
principal amount of the Class A-3 Notes shall be due and payable following the
occurrence and continuance of an Event of Default, as described in the
Indenture. All principal payments on the Class A-3 Notes shall be made pro rata
to the Class A-3 Noteholders entitled thereto.
Payments of principal and interest on this Note due and payable on each
Distribution Date or Redemption Date shall be made by check mailed to the Person
whose name appears as the registered Holder of this Note (or one or more
Predecessor Notes) on the Note Register as of the close of business on the
related Record Date, except that with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such nominee. Such checks shall be
mailed to the Person entitled thereto at the address of such Person as it
appears on the Note Register as of the applicable Record Date without requiring
that this Note be submitted for notation of payment. Any reduction in the
principal amount of this Note (or any one or more Predecessor Notes) affected by
any payments made on any Distribution Date or Redemption Date shall be binding
upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the remaining unpaid principal amount of this
Note on a Distribution Date or Redemption Date, then the Trustee, in the name of
and on behalf of the Issuer, will notify the Person who was the registered
Holder hereof as of the Record Date preceding such Distribution Date or
Redemption Date by notice mailed within 20 days of such Distribution Date or
Redemption Date and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Corporate Trust Office of the
Trustee or at the office of the Trustee's agent appointed for such purposes
located in The City of New York.
F-4
<PAGE> 99
As provided in the Indenture, the Notes may be redeemed pursuant to the
Indenture, in whole, but not in part, at the option of the Seller, on any
Distribution Date as of which the Aggregate Scheduled Balance is less than or
equal to 5% of the Cut-Off Date Aggregate Scheduled Balance.
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Owner Trustee or the Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Trustee or the Owner Trustee in its individual capacity, (ii)
any owner of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director or employee of the Trustee or the Owner
Trustee in its individual capacity, any holder of a beneficial interest in the
Issuer, the Owner Trustee or the Trustee or of any successor or assign of the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder or
Note Owner will not at any time institute against the Seller or the Issuer, or
join in any institution against the Seller or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under any
United States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the other Basic Documents.
The Issuer has entered into the Indenture, and this Note is issued with
the intention that, for federal, state and local income, single business and
franchise tax purposes, the Notes will qualify as indebtedness of the Issuer
secured by the Trust Estate. Each Noteholder, by acceptance of a Note (and each
Note Owner by acceptance of a beneficial interest in a Note), agrees to treat
the Notes for federal, state and local income, single business and franchise tax
purposes as indebtedness of the Issuer.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Trustee and the Insurer and any agent of the Issuer, the Trustee
or the Insurer may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and neither the Issuer, the Trustee nor any such agent shall be
affected by notice to the contrary.
F-5
<PAGE> 100
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Insurer and of the Holders of Notes
representing a majority of the Outstanding Amount of the Notes. The Indenture
also contains provisions permitting the Holders of Notes representing specified
percentages of the Outstanding Amount of the Notes, on behalf of the Holders of
all the Notes, to waive compliance by the Issuer with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Note (or any one of more
Predecessor Notes) shall be conclusive and binding upon such Holder and upon all
future Holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Notes issued thereunder.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of California, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws, except that the duties of the Trustee under the Indenture shall be
governed by New York law.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency herein prescribed.
F-6
<PAGE> 101
EXHIBIT F
FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Note, and all rights thereunder, hereby irrevocably constituting and
appointing
- --------------------------------------------------------------------------------
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:
-----------------
Signature Guaranteed By:
<TABLE>
<S> <C>
- ----------------------------------------------------- -----------------------------------------------------
Signature must be guaranteed by an eligible guarantor Notice: The signature(s)
institution which is a participant in the Securities on this assignment must
Transfer Agent's Medallion correspond with the name(s) as it appears on the face
Program (STAMP) or similar signature of the within Note in every particular,
guarantee program without guarantee program. alteration,
enlargement, or any change whatsoever.
</TABLE>
- -----------------------------------------------------
(Authorized Officer)
G-1
<PAGE> 102
EXHIBIT G
FORM OF NOTE POLICY
G-1
<PAGE> 1
EXHIBIT 5.1
[MITCHELL SILBERBERG & KNUPP LLP LETTERHEAD]
FILE NO: 27518-29
October 22, 1999
VIA EDGAR
- ---------
Securities and Exchange Commission
450 5th Street, N.W.
Judiciary Plaza
Washington, DC 20549
WFS Financial Inc
23 Pasteur Road
Irvine, California 92618
Re: WFS Financial 1999-C Owner Trust
Registration Statement on Form S-3, File Number 333-80423
---------------------------------------------------------
Dear Ladies and Gentlemen:
We are counsel for WFS Financial Auto Loans, Inc. (the "Company") in
connection with the proposed offering of $500,000,000 principal amount of Auto
Receivable Backed Securities consisting of three classes of Notes and one class
of Certificates (the Notes and Certificates together, the "Securities") as
identified in the above referenced Registration Statement to be issued by the
WFS Financial 1999-C Owner Trust (the "Trust") originated by the Company. The
Notes are obligations of the Trust secured by the assets of the Trust and the
Certificates represent undivided interests in the assets of the Trust. The Notes
are to be issued pursuant to an indenture between the Trust and Bankers Trust
Company as the Trustee (the "Indenture"). The Certificates are to be issued
pursuant to a trust agreement (the "Agreement") among the Company, WFS
Investments, Inc., Financial Security Assurance Inc. and Chase Manhattan Bank
Delaware, as Owner Trustee. The Securities are to be registered for sale
pursuant to the accompanying Form S-3 Registration Statement.
In our capacity as counsel for the Company and for purposes of this
opinion, we have made those examinations and investigations of the legal and
factual matters we deemed advisable, and have examined the originals, or copies
identified to our satisfaction as being true copies of the originals, of the
certificates, documents, corporate records, and other instruments which we, in
our judgment, have considered necessary or appropriate to enable us to render
the opinion expressed below. We have relied, without independent investigation
or confirmation, upon certificates
<PAGE> 2
Securities and Exchange Commission
WFS Financial Inc
October 22, 1998
Page 2
provided by public officials and officers of the Company as to certain factual
matters. In the course of our examinations and investigations, we have assumed
the genuineness of all signatures on original documents, and the due execution
and delivery of all documents requiring due execution and delivery for the
effectiveness thereof.
Based upon and subject to the foregoing and in reliance thereon, and
subject to the assumptions, exceptions and qualifications set forth herein, it
is our opinion that:
The Notes, when executed and authenticated as specified in the
Indenture and delivered to and paid for by Banc of America Securities LLC,
Credit Suisse First Boston and Donaldson, Lufkin & Jenrette Securities
Corporation (together, the "Underwriters") pursuant to the underwriting
agreement among the Underwriters, the Company and WFS Financial Inc (the "Under
writing Agreement"), will constitute legal, valid and binding obligations of the
Trust, entitled to the benefits of the Indenture, and enforceable in accordance
with their terms, except as enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other laws, provisions or principles now or
hereafter in effect affecting the enforcement of creditors' rights generally and
except that no opinion is expressed as to the availability of remedies of
specific performance, injunction or other forms of equitable relief, all of
which may be subject to certain tests of equity jurisdiction, equitable defenses
and the discretion of the court before which any such proceeding may be brought.
The Certificates have been duly authorized, and when executed and
authenticated as specified in the Agreement and delivered to and paid for by the
Underwriters pursuant to the Underwriting Agreement, will be legally issued,
fully paid and non-assessable, and will be binding obligations of the Trust and
entitled to the benefits of the Agreement.
We consent to the filing of this opinion with, and to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving our consent, we do not hereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations thereunder. This opinion is given as of
the date hereof and we assume no obligation to advise you of changes that may
hereafter be brought to our attention.
Very truly yours,
/s/ Mitchell Silberberg & Knupp LLP
Mitchell Silberberg & Knupp LLP
AEK:tf
<PAGE> 1
EXHIBIT 8.1
[MITCHELL SILBERBERG & KNUPP LLP LETTERHEAD]
FILE NO: 27518-29
October 22, 1999
VIA EDGAR
- ---------
WFS Financial Auto Loans, Inc.
23 Pasteur Road
Irvine, California 92618
Re: WFS Financial 1999-C Owner Trust
Registration Statement on Form S-3, File Number 333-80423
---------------------------------------------------------
Dear Ladies and Gentlemen:
We have acted as legal counsel for WFS Financial Auto Loans, Inc., a
California corporation (the "Company"), in connection with the preparation of
the Company's Registration Statement, as amended, on Form S-3 under the
Securities Act of 1933, as amended (the "Registration Statement"), filed with
the Securities and Exchange Commission relating to the issuance of certain
certificates (the "Certificates") representing undivided interests in the WFS
Financial 1999-C Owner Trust (the "Trust") and certain notes (the "Notes" and
together with the Certificates the "Securities") secured by the assets of the
Trust.
In rendering the opinion set forth below, we have examined the
Registration Statement dated as filed on October 22, 1999 (the "Form S-3") and
such exhibits to the Form S-3 as we have considered necessary or appropriate for
the purposes of this opinion. In rendering this opinion, we have assumed that a
final version of the Form S-3 will become the effective Registration Statement
of the Company without material change in the facts stated, and that the
issuance of the Securities will be duly authorized by all necessary action and
duly executed substantially in the manner described in the Form S-3. In
rendering this opinion, we have relied upon certain representations regarding
the underlying facts set forth in the Form S-3, including the existence, nature
and sufficiency of the installment contracts which shall be held as assets of
the Trust, as set forth in certain certificates provided by officers of the
Company and by officers of Western Financial Bank and WFS Financial Inc. The
opinion set forth herein is expressly based upon such assumptions and
representations and upon the accuracy of those facts so assumed or represented.
With respect to the underlying facts, we have made only such factual inquiries
as we have deemed appropriate and have not independently verified any facts.
<PAGE> 2
WFS Financial Auto Loans, Inc.
October 22, 1999
Page 2
Based upon and subject to the foregoing, and in reliance thereon and
subject to the assumptions, exceptions and qualifications set forth herein, it
is our opinion that the information contained in the Form S-3 under the caption
"Federal Income Tax Consequences" and the caption "California Income Tax
Consequences", and the opinions set forth under each such caption, to the extent
that such information constitutes matters of law or legal conclusions, is
correct.
The opinions expressed in this letter are based upon relevant
provisions of the Internal Revenue Code of 1986, as amended, the California
Revenue and Taxation Code, federal and state income tax regulations, and current
interpretations thereof as expressed in court decisions and administrative
determinations in effect on this date. All of these provisions, regulations and
interpretations are subject to changes which might result in substantial
modifications of our opinions, and we do not undertake to advise you of any such
modification. We caution that although the opinions expressed in this letter
represents our best legal judgment as to such matter, our opinions have no
binding effect on the Internal Revenue Service, the California Franchise Tax
Board or the courts.
We have expressed no opinion as to other tax issues affecting the
Company, the purchasers of the Securities or any other participant to the
transactions described in the Form S-3. We expressly refrain from rendering any
opinion as to the tax laws of any state (or subdivision thereof) other than
California or any foreign country.
We consent to the filing of this opinion with, and to the reference to
our firm under the caption "Legal Matters" in the Registration Statement. In
giving our consent, we do not hereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or the rules and regulations thereunder. This opinion is given as of
the date hereof and we assume no obligation to advise you of changes that may
hereafter be brought to our attention.
Very truly yours,
/s/ Mitchell, Silberberg & Knupp LLP
Mitchell, Silberberg & Knupp LLP
<PAGE> 1
SALE AND SERVICING AGREEMENT
among
WFS FINANCIAL 1999-C OWNER TRUST,
as Issuer,
WFS FINANCIAL AUTO LOANS, INC.,
as Seller,
and
WFS FINANCIAL INC,
as Master Servicer
Dated as of October 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE ONE
DEFINITIONS
<S> <C>
Section 1.01. Definitions ................................................ 1
Section 1.02. Usage of Terms ............................................. 24
Section 1.03. Section References ......................................... 24
Section 1.04. Calculations ............................................... 24
Section 1.05. Accounting Terms ........................................... 25
ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts..................................... 26
ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller ............... 28
Section 3.02. Purchase of Certain Contracts .............................. 33
Section 3.03. Custody of Contract Files .................................. 33
Section 3.04. Duties of Master Servicer as Custodian ..................... 34
Section 3.05. Instructions; Authority to Act ............................. 35
Section 3.06. Indemnification ............................................ 35
Section 3.07. Effective Period and Termination ........................... 36
Section 3.08. Nonpetition Covenant ....................................... 36
Section 3.09. Collecting Title Documents Not Delivered at the
Closing Date ............................................... 37
ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer ............................... 38
Section 4.02. Collection of Contract Payments ......................... 42
Section 4.03. Realization upon Defaulted Contracts and Liquidated
Contracts ............................................... 42
Section 4.04. Insurance ............................................... 43
Section 4.05. Maintenance of Security Interests in Financed Vehicles .. 43
Section 4.06. Covenants, Representations and Warranties
of Master Servicer ...................................... 43
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 4.07. Repurchase of Contracts upon Breach of Covenant ......... 45
Section 4.08. Servicing Compensation .................................. 45
Section 4.09. Reporting by the Master Servicer ........................ 45
Section 4.10. Annual Statement as to Compliance ....................... 48
Section 4.11. Annual Independent Certified Public Accountants' Report . 49
Section 4.12. Access to Certain Documentation and Information
Regarding Contracts ..................................... 49
Section 4.13. Fidelity Bond ........................................... 49
Section 4.14. Indemnification; Third Party Claims ..................... 49
ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts ......................... 51
Section 5.02. Collections; Realization Upon Policies; Net Deposits .... 53
Section 5.03. Application of Collections .............................. 55
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts 55
Section 5.05. Distributions ........................................... 56
Section 5.06. Spread Account .......................................... 57
Section 5.07. Statements to Securityholders ........................... 58
ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence ..................................... 60
Section 6.02. Liability of Seller; Indemnities ........................ 60
Section 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Seller; Certain Limitations ............. 61
Section 6.04. Limitation on Liability of Seller and Others ............ 62
Section 6.05. Seller Not to Resign .................................... 63
Section 6.06. Seller May Own Securities ............................... 63
ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities ............... 64
Section 7.02. Corporate Existence; Status as Master Servicer; Merger .. 65
Section 7.03. Performance of Obligations .............................. 65
Section 7.04. Master Servicer Not to Resign; Assignment ............... 65
Section 7.05. Limitation on Liability of Master Servicer and Others ... 66
</TABLE>
ii
<PAGE> 4
<TABLE>
ARTICLE EIGHT
DEFAULT
<S> <C>
Section 8.01. Servicer Default ........................................ 68
Section 8.02. Indenture Trustee to Act; Appointment of Successor ...... 69
Section 8.03. Repayment of Advances ................................... 70
Section 8.04. Notification to Noteholders and Certificateholders ...... 70
Section 8.05. Waiver of Past Defaults ................................. 70
Section 8.06. Insurer Direction of Insolvency Proceedings ............. 70
ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts ...................... 72
Section 9.02. Transfer to the Insurer ................................. 73
ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment .............................................. 74
Section 10.02. Protection of Title to Trust ........................... 75
Section 10.03. Governing Law .......................................... 77
Section 10.04. Notices ................................................ 77
Section 10.05. Severability of Provisions ............................. 77
Section 10.06. Assignment ............................................. 77
Section 10.07. Third Party Beneficiaries .............................. 77
Section 10.08. Insurer Default or Insolvency .......................... 78
Section 10.09. Counterparts ........................................... 78
Section 10.10. Headings ............................................... 78
Section 10.11. Assignment by Issuer ................................... 78
Section 10.12. Limitation of Liability of Owner Trustee ............... 78
SCHEDULES
Schedule A Schedule of Contracts ............................ SA-1
Schedule B Location of Contract Files ....................... SB-1
</TABLE>
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<TABLE>
EXHIBITS
<S> <C>
Exhibit A Form of Certificate Policy ................................. A-1
Exhibit B Form of Insurance Agreement ................................ B-1
Exhibit C Form of Note Policy ........................................ C-1
Exhibit D Form of RIC ................................................ D-1
Exhibit E Form of Subservicing Agreement ............................. E-1
Exhibit F Form of Distribution Date Statement ........................ F-1
</TABLE>
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<PAGE> 6
This SALE AND SERVICING AGREEMENT, dated as of October 1, 1999, is
among WFS Financial 1999-C Owner Trust (the "Issuer"), WFS Financial Auto Loans,
Inc. (the "Seller") and WFS Financial Inc ("WFS" or, in its capacity as Master
Servicer, the "Master Servicer").
WHEREAS, the Issuer desires to purchase from the Seller a portfolio of
receivables arising in connection with automobile retail installment sales
contracts and installment loans (collectively, the "Contracts") primarily
originated by motor vehicle dealers and purchased by WFS, which Contracts were
subsequently sold by WFS to the Seller;
WHEREAS, the Seller is willing to sell the Contracts to the Issuer
pursuant to the terms hereof; and
WHEREAS, the Master Servicer is willing to service the Contracts
pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accelerated Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to the lesser of (i) the sum of one-twelfth
of 0% of the Aggregate Scheduled Balance as of the first day of each month of
the Due Period relating to such Distribution Date and (ii) amounts remaining on
deposit in the Collection Account for such Distribution Date after giving effect
to the distributions pursuant to Section 5.05(a) without regard to the inclusion
of such amount as part of the Note Principal Distributable Amount or the
Certificate Principal Distributable Amount, as the case may be. The Accelerated
Principal Distributable Amount shall be allocated and distributed as follows:
(i) on each Distribution Date to but excluding the Distribution Date on which
the principal amount of the Class A-3 Notes has been reduced to zero, to the
Note Distribution Account; (ii) on the Distribution Date on which the principal
amount of the Class A-3 Notes is reduced to zero, (A) to the Note Distribution
Account in the amount necessary to reduce the principal amount of the Class A-3
Notes to zero and (B) to the Certificate Distribution Account, any remaining
portion; and (iii) on each Distribution Date thereafter, to and including the
Distribution Date on which the principal amount of the Certificates is reduced
to zero, to the Certificate Distribution Account.
"Advance" means the aggregate amount, as of a Master Servicer Report
Date, that the Master Servicer is required to advance in respect of the
Contracts pursuant to Section 5.04(a).
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control"
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<PAGE> 7
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" or "controlled" have meanings correlative to the foregoing.
"Aggregate Net Liquidation Losses" means, with respect to any Due
Period, the aggregate of the amounts by which (i) the principal amount of each
Contract that became a Liquidated Contract pursuant to clause (ii) or (iv) of
the definition of the term "Liquidated Contract" during such Due Period plus
accrued and unpaid interest thereon (adjusted to the Net Contract Rate) to the
last Due Date in such Due Period exceeds (ii) the Net Liquidation Proceeds for
such Contract.
"Aggregate Scheduled Balance" means, with respect to any Distribution
Date and the Outstanding Contracts, the aggregate of the Scheduled Balances of
such Contracts as of the end of the Due Period immediately preceding such
Distribution Date.
"Aggregate Scheduled Balance Decline" means, with respect to any
Distribution Date, the amount by which the Aggregate Scheduled Balance as of the
immediately preceding Distribution Date (or the Cut-Off Date Aggregate Scheduled
Balance in the case of the first Distribution Date) exceeds the Aggregate
Scheduled Balance as of such Distribution Date.
"Amount Financed" means, with respect to a Contract, the amount
advanced under the Contract toward the purchase price of the related Financed
Vehicle and any related costs, exclusive of any amount allocable to the premium
of force-placed physical damage insurance covering such Financed Vehicle.
"APR" of a Contract means annual percentage rate and is the annual rate
of finance charges specified in such Contract.
"Assignments" means, collectively, (i) the original instrument of
assignment of a Contract and all other documents securing such Contract made by
the Seller to the Owner Trustee (or in the case of any Contract acquired by the
Seller from another Person, from such other Person to the Seller and from the
Seller to the Owner Trustee), and (ii) the original instrument granting a
security interest in such Contract and other documents made by the Owner Trustee
to the Insurer, which, in the case of clause (i) above, is in a form sufficient
under the laws of the jurisdiction under which the security interest in the
related Financed Vehicle arises to permit the assignee to exercise all rights
granted by the Obligor under such Contract and such other documents and all
rights available under applicable law to the Obligee under such Contract and
such other documents and, in the case of clause (ii) above, is in a form
sufficient under the laws of the jurisdiction under which the security interest
in the related Financed Vehicle arises to permit the Insurer, as a secured
party, to exercise, upon default, all rights granted by the Obligor under such
Contract and such other documents and all rights available under applicable law
to the Obligee under such Contract and which, in the case of either clause (i)
or (ii) above, may, to the extent permitted by the laws of such jurisdiction, be
a blanket instrument of assignment covering other Contracts as well and which
may also, to the extent permitted by the laws of the jurisdiction governing such
Contract, be an instrument of assignment running directly from the Seller to the
Owner Trustee and the Insurer.
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<PAGE> 8
"Bank" means Western Financial Bank, and its successors.
"Basic Documents" shall have the meaning specified in the Indenture.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which banking institutions in Los Angeles, California, Wilmington,
Delaware or New York, New York are authorized or obligated by law, executive
order or government decree to remain closed.
"Calculation Day" means the last day of each calendar month.
"Certificate Balance" equals $52,500,000 on the Closing Date, and, on
any date thereafter, equals the Original Certificate Balance, reduced by all
amounts allocable to principal previously distributed to Certificateholders.
"Certificate Deficiency Claim Amount" means, with respect to each
Distribution Date, the amount, if any, by which the Certificate Distributable
Amount for such Distribution Date exceeds the amount of Net Collections actually
deposited in the Certificate Distribution Account on such Distribution Date in
accordance with Section 5.05.
"Certificate Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificate Principal Distributable Amount and
the Certificate Interest Distributable Amount for such Distribution Date.
"Certificate Distribution Account" shall have the meaning specified in
the Trust Agreement.
"Certificate Final Distribution Date" means the ______ 20, 200_
Distribution Date.
"Certificate Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the sum of the Certificate Quarterly Interest
Distributable Amount for the immediately preceding Distribution Date and any
outstanding Certificate Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest on the Certificates
that is actually deposited in the Certificate Distribution Account on such
preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Pass-Through Rate for the related Interest Period.
"Certificate Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificate Quarterly Interest Distributable
Amount for such Distribution Date and the Certificate Interest Carryover
Shortfall for such Distribution Date. Interest with respect to the Certificates
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months for all purposes of this Agreement and the other Basic Documents.
"Certificate Percentage" means (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of the Class A-3
Notes is reduced to zero, zero; (ii) for the Distribution Date on which the
principal amount of the Class A-3 Notes is reduced to zero, (A) zero until the
principal amount of the Class A-3 Notes has been reduced to zero and (B) with
respect to any remaining portion of the Principal Distributable Amount, 100%;
and (iii) for any Distribution Date thereafter, 100%.
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<PAGE> 9
"Certificate Policy" means the financial guaranty insurance policy
issued by the Insurer to the Owner Trustee on behalf of the Certificateholders,
the form of which is attached as Exhibit A hereto.
"Certificate Policy Claim Amount" means, with respect to each
Distribution Date, the amount, if any, by which the Certificate Distributable
Amount for such Distribution Date exceeds the sum of (i) the amount of Net
Collections actually deposited in the Certificate Distribution Account on such
Distribution Date in accordance with Section 5.05 plus (ii) the amount of the
Certificate Deficiency Claim Amount, if any, paid to the Certificate
Distribution Account from the Spread Account pursuant to a Deficiency Notice
delivered for such Distribution Date.
"Certificate Pool Factor" means, as of any Distribution Date, a
six-digit decimal figure equal to the Certificate Balance (after giving effect
to any reductions therein to be made on such Distribution Date) divided by the
Original Certificate Balance.
"Certificate Principal Carryover Shortfall" means, as of any
Distribution Date, the excess of the sum of the Certificate Quarterly Principal
Distributable Amount and any outstanding Certificate Principal Carryover
Shortfall for the immediately preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such Distribution Date.
"Certificate Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificate Quarterly Principal Distributable
Amount for such Distribution Date and any outstanding Certificate Principal
Carryover Shortfall for the immediately preceding Distribution Date; provided,
however, that the Certificate Principal Distributable Amount shall not exceed
the Certificate Balance. In addition, on the Distribution Date on which the
principal amount of the Class A-3 Notes has been reduced to zero, any
Accelerated Principal Distributable Amounts remaining after such reduction shall
be included in the Certificate Principal Distributable Amount, and on each
Distribution Date thereafter, to and including the Distribution Date on which
the Certificate Balance is reduced to zero, the Accelerated Principal
Distributable Amount, if any, will be included in the Certificate Principal
Distributable Amount. Notwithstanding the foregoing, the Certificate Principal
Distributable Amount, on the Certificate Final Distribution Date, shall not be
less than the amount that is necessary (after giving effect to the other amounts
to be deposited in the Certificate Distribution Account on such Distribution
Date and allocable to principal) to reduce the Certificate Balance to zero.
"Certificate Quarterly Interest Distributable Amount" means, with
respect to any Distribution Date, 90 days of interest (or, in the case of the
first Distribution Date, interest accrued from and including October 1, 1999 to
but excluding such Distribution Date) at the Pass-Through Rate on the
Certificate Balance on the immediately preceding Distribution Date, after giving
effect to all payments of principal on such preceding Distribution Date (or, in
the case of the first Distribution Date, the Original Certificate Balance).
"Certificate Quarterly Principal Distributable Amount" means, with
respect to any Distribution Date, the Certificate Percentage of the Principal
Distributable Amount for such Distribution Date.
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<PAGE> 10
"Certificate Register" shall have the meaning specified in the Trust
Agreement.
"Certificateholders" shall have the meaning specified in the Trust
Agreement.
"Certificates" means the Trust Certificates (as such term is defined in
the Trust Agreement).
"Charge-Off Percentage" means, with respect to any three calendar month
period, the annualized percentage equivalent of the average of the percentages
of charged-off Contracts for each month in such period. For each month, the
percentage of charged-off Contracts shall be the percentage equivalent of a
fraction, the numerator of which is the aggregate Scheduled Balance for such
month of all Contracts that became Liquidated Contracts pursuant to clauses (ii)
or (iv) of the definition of the term "Liquidated Contract" during such month,
less any Net Liquidation Proceeds received during such month (and not reflected
in prior periods) with respect to such Contracts or from any Contracts
charged-off in prior periods, and the denominator of which is the aggregate
Scheduled Balances of all Outstanding Contracts as of the end of the immediately
preceding month.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A-1 Final Distribution Date" means the ______ 20, 200__
Distribution Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register, as such term is defined in the Indenture.
"Class A-1 Rate" means ______% per annum.
"Class A-2 Final Distribution Date" means the ______ 20, 200__
Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"Class A-2 Rate" means ______% per annum.
"Class A-3 Final Distribution Date" means the ______ 20, 200__
Distribution Date.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-3 Rate" means ______% per annum.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
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<PAGE> 11
"Closing Date" means 3, 1999.
"Collateral Agent" means Bankers Trust Company, in its capacity as
collateral agent for the Insurer under the Insurance Agreement, and each
successor thereto.
"Collection Account" means the account established and maintained as
such pursuant to Section 5.01.
"Company" means WFS Investments, Inc., and its successors.
"Contract" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement which has been
executed by an Obligor and pursuant to which such Obligor purchased, financed or
pledged the Financed Vehicle described therein, agreed to pay the deferred
purchase price (i.e., the purchase price net of any down payment) or amount
borrowed, together with interest, as therein provided in connection with such
purchase or loan, granted a security interest in such Financed Vehicle, and
undertook to perform certain other obligations as specified in such Contract and
which has been conveyed to the Trust pursuant to this Agreement.
"Contract Documents" means, with respect to each Contract, (i) the
Contract; (ii) either the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as determined by the Master Servicer to be permitted or required to
perfect such security interest under the laws of the applicable jurisdiction
(or, in the case of a Contract listed on the Schedule of Contracts, written
evidence from the Dealer selling such Financed Vehicle that the Title Document
for such Financed Vehicle showing the Seller as first lienholder has been
applied for); (iii) the related Assignments; (iv) any agreement(s) modifying the
Contract (including, without limitation, any extension agreement(s)); and (v)
documents evidencing the existence of physical damage insurance covering such
Financed Vehicle.
"Contract Files" means the Contract Documents and all other papers and
computerized records customarily kept by the Master Servicer and all
Subservicers, as the case may be, in servicing contracts and loans comparable to
the Contracts.
"Contract Number" means, with respect to any Contract included in the
Trust, the number assigned to such Contract by the Master Servicer, which number
is set forth in the related Schedule of Contracts.
"Contract Rate" means, with respect to a Contract that is a (i) Simple
Interest Contract, the interest rate borne by such Contract as determined by the
terms thereof, and (ii) Rule of 78's Contract, the discount rate used in
accordance with the definition of the term "Scheduled Balance" to derive the
Scheduled Balance of such Contract.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Four Albany Street - 10th Floor, New York, New York 10006, Attention:
Corporate Trust Department - Asset Backed Group; or at such other
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<PAGE> 12
address as the Indenture Trustee may designate from time to time by notice to
the Certificateholders, the Insurer, the Master Servicer and the Seller.
"Cut-Off Date" means October 1, 1999.
"Cut-Off Date Aggregate Scheduled Balance" means $500,000,000, the
aggregate Scheduled Balance of the Contracts as of the Cut-Off Date.
"Dealer" means the seller of a Financed Vehicle, which seller
originated and assigned the related Contract, including the Bank.
"Defaulted Contract" means, with respect to any Due Period, a Contract
(i) which is, at the end of such Due Period, delinquent in the amount of at
least two monthly payments or (ii) with respect to which the related Financed
Vehicle has been repossessed or repossession efforts have been commenced.
"Deficiency Claim Date" means, with respect to any Distribution Date,
the fourth Business Day immediately preceding such Distribution Date.
"Deficiency Notice" means, with respect to any Distribution Date, the
notice delivered pursuant to Section 5.02(c) by the Master Servicer to the
Indenture Trustee, with a copy to the Insurer and the Owner Trustee.
"Delinquency Percentage" means, with respect to any three calendar
month period, the average of the percentages of delinquent Contracts for each
month in such period. For each month the percentage of delinquent Contracts
shall be the percentage equivalent of a fraction, the numerator of which is the
sum of (i) the aggregate Scheduled Balance of all Outstanding Contracts 61 days
or more delinquent (after taking into account permitted extensions), plus (ii)
the aggregate Scheduled Balance of all Contracts in respect of which the related
Financed Vehicles have been repossessed but have not been liquidated (to the
extent the related Contract is not otherwise reflected in clause (i) above), and
the denominator of which is the aggregate Scheduled Balance of all outstanding
Contracts, in each case, on the last day of such calendar month.
"Delivery" means, when used with respect to Trust Account Property:
(i) with respect to certificated securities, bankers'
acceptances, commercial paper, negotiable certificates of deposit and
any other obligations which evidence a right to the payment of money
and is not itself a security agreement or lease and is of a type which
is in ordinary course of business transferred by delivery with
necessary endorsement or assignment (collectively, "Physical
Property"): (A) the Indenture Trustee or the Owner Trustee, as the case
may be, or its Financial Intermediary acquires possession of the
Physical Property, and evidence that any such Physical Property that is
in registerable form has been registered in the name of the Trustee,
its Financial Intermediary, its custodian or its nominee; (B) the
Financial Intermediary, not a clearing corporation, sends the Indenture
Trustee or the Owner Trustee, as the case may be, confirmation of the
transfer and also by book entry or otherwise identifies as belonging to
the Indenture Trustee or the Owner Trustee, as the case may be, the
Physical Property in the Financial Intermedi-
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<PAGE> 13
ary's possession; or (C) with respect to a clearing corporation,
appropriate entries to the account of the Indenture Trustee or the
Owner Trustee, as the case may be, or a Person designated by him or her
and, if certificated, it is both, in the custody of the clearing
corporation or another clearing corporation, a custodian bank or a
nominee of any of them and, in bearer form or endorsed in blank by the
appropriate person or registered in the name of the clearing
corporation, custodian bank, or a nominee of any of them;
(ii) with respect to any Trust Account Property that is a
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations, the following procedures, all in
accordance with applicable law, including applicable Federal
regulations and Articles 8 and 9 of the UCC: (A) book-entry
registration of such property to an appropriate book-entry account
maintained with a Federal Reserve Bank by the Indenture Trustee or the
Owner Trustee, as the case may be, of a deposit advice or other written
confirmation of such book-entry registration, (B) the making by any
such custodian of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to
federal book-entry regulations as belonging to the Indenture Trustee or
the Owner Trustee, as the case may be, and indicating that such
custodian holds such Trust Account Property solely as agent for the
Indenture Trustee or the Owner Trustee, as the case may be, and the
making by the Indenture Trustee or the Owner Trustee, as the case may
be, of entries in its books and records establishing that it holds such
Trust Account Property solely as trustee pursuant to Section 5.01, and
(C) such additional or alternative procedures as may hereafter become
necessary to effect complete transfer of ownership of any such Trust
Account Property to the Indenture Trustee or the Owner Trustee, as the
case may be, consistent with changes in applicable law or regulations
or the interpretation thereof; and
(iii) with respect to any Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (ii) above, registration of the transfer to, and
ownership of such Trust Account Property by, the Indenture Trustee or
the Owner Trustee, as the case may be, its custodian or its nominee by
the issuer of such Trust Account Property.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.
"Distribution Date" means each January 20, April 20, July 20 and
October 20, or, if any such date shall not be a Business Day, the next
succeeding Business Day, commencing January 20, 2000.
"Distribution Date Outstanding Principal Balance" means, with respect
to any Contract which has been the subject of a Partial Prepayment and under
which payments are applied on the basis of the Rule of 78's, the amount equal to
the total of all Monthly P&I due after the Distribution Date next succeeding the
Due Period during which such Partial Prepayment was received, less any unearned
finance charge as of the Due Date next preceding such Distribution Date computed
in accordance with the Rule of 78's.
"Distribution Date Statement" shall have the meaning specified in
Section 4.09(a).
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<PAGE> 14
"DTC" means The Depository Trust Company, and its successors.
"Due Date" means, as to any Contract, the date upon which an
installment of Monthly P&I is due.
"Due Period" means, with respect to any Distribution Date, the three
month period commencing on the first day of the third month preceding the month
in which such Distribution Date occurs (or from October 1,1999 in the case of
the first Distribution Date) to the last day of the month immediately preceding
the month in which such Distribution Date occurs.
"Eligible Account" means (i) a segregated trust account in the
corporate trust department that is maintained with a depository institution or
trust company the commercial paper or other short-term debt obligations of which
have credit ratings from Standard & Poor's at least equal to "A-1" and from
Moody's equal to "P-1", which account is fully insured up to applicable limits
by the FDIC or (ii) a general ledger account or deposit account that is (a)
guaranteed by an entity the long-term unsecured debt obligations of which are
rated "Aa2" by Moody's and "AAA" by Standard & Poor's or the commercial paper or
other short-term debt obligations of which have credit ratings from Standard &
Poor's at least equal to "A-1+" and from Moody's equal to "P-1" or (b) that
otherwise will not result in the qualification, reduction or withdrawal by any
Rating Agency of its then-applicable rating on any Class of Notes or the
Certificates (without giving effect to the guaranty under either Policy of
payments owing to Securityholders). If any Eligible Account falls below the
ratings specified in (i) or (ii) above, all monies in such Eligible Account will
be moved within 15 days to an account meeting the requirements of an Eligible
Account.
"Eligible Investments" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
(i) direct obligations of, and obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality of the United States the obligations of
which are backed by the full faith and credit of the United States;
(ii) general obligations of or obligations guaranteed as to
timely payment of principal and interest by FNMA, FHLMC or any state of
the United States, the District of Columbia or the Commonwealth of
Puerto Rico then rated the highest available credit rating of each
Rating Agency for such obligations;
(iii) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or the
Owner Trustee) incorporated under the laws of the United States or any
state and subject to supervision and examination by federal and/or
state banking authorities, so long as at the time of such investment or
contractual commitment providing for such investment either (a) the
long-term, unsecured debt obligations of such depository institution or
trust company have credit ratings from Moody's at least equal to "Aa2"
and shall have commercial paper or other short-term debt obligations
rated at least "A-1+" by Standard & Poor's and "P-1" by Moody's or (b)
the investment is guaranteed by an entity the long-term, unsecured debt
obligations of which have been
9
<PAGE> 15
rated "AAA" by Standard & Poor's and at least "Aa2" by Moody's or
otherwise will not result in the qualification, reduction or withdrawal
by Moody's or Standard & Poor's of its then-applicable rating on any
Class of Notes or the Certificates (without giving effect to the
guaranty under either Policy of payments owing to Securityholders); if
the investments in this paragraph (iii) fall below the specified
ratings, the invested monies shall be moved to Eligible Investments as
soon as the investment matures; however, no new monies may be invested
in any instrument that is not currently an Eligible Investment;
(iv) repurchase obligations with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed as to timely payment of principal and interest by an agency
or instrumentality of the United States, in either case entered into
with a depository institution or trust company (including the Indenture
Trustee or the Owner Trustee), acting as principal and the
counterparty, the long-term unsecured debt obligations of which are
rated "AAA" by Standard & Poor's and at least "Aa2" by Moody's and
commercial paper or other short-term debt obligations are rated at
least "A-1+" by Standard & Poor's and "P-1" by Moody's;
(v) securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States or
any state thereof which at the time of such investment or contractual
commitment providing for such investment have long-term, unsecured debt
obligations rated "AAA" by Standard & Poor's and at least "Aa2" by
Moody's or better and shall have commercial paper or other short-term
debt obligations rated at least "A-1+" by Standard & Poor's and "P-1"
by Moody's; provided, however, that securities issued by any
corporation will not be Eligible Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust to
exceed 10% of the sum of the aggregate Outstanding Principal Balances
of the Contracts and all Eligible Investments held as part of the
Trust;
(vi) commercial paper given the highest rating by each Rating
Agency at the time of such investment; provided that the issuer of such
commercial paper must have a long-term unsecured debt rating of at
least A1 from Moody's and A+ from Standard & Poor's;
(vii) the RIC, if guaranteed by an entity which has long-term,
unsecured debt obligations rated "AAA" by Standard & Poor's and at
least "Aa2" by Moody's or otherwise will not result in a qualification,
reduction or withdrawal by Moody's or Standard & Poor's of its
then-applicable rating on any Class of Notes or the Certificates
(without giving effect to the guaranty under either Policy of payments
owing to Securityholders); if the investments in this paragraph (vii)
fall below the specified ratings, the invested monies shall be moved to
Eligible Investments on the fifth Business Day preceding the next
succeeding Distribution Date; however, no new monies may be invested in
the RIC until the RIC once again becomes an Eligible Investment; and
(viii) any other investments which meet the criteria of each
Rating Agency as being consistent with their then-current rating of
each Class of Notes and the Certificates.
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<PAGE> 16
"Excess Amounts" shall have the meaning specified in Section 5.05(b).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation, and its
successors.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its
successors.
"Final Distribution Date" means with respect to (i) the Notes, the
Class A-1 Final Distribution Date, the Class A-2 Final Distribution Date or the
Class A-3 Final Distribution Date, as the case may be, and (ii) the
Certificates, the Certificate Final Distribution Date.
"Financed Vehicle" means, as to any Contract, an automobile or
light-duty truck, together with all accessions thereto, securing the related
Obligor's indebtedness under such Contract.
"Financial Intermediary" means a bank, broker, clearing corporation or
the Person (or the nominee of any of them) that in the ordinary course of its
business maintains security accounts for its customers and is acting in that
capacity.
"Fiscal Agent" shall have the meaning set forth in the Policies.
"Full Prepayment" means any of the following: (i) payment to the Master
Servicer of 100% of the outstanding principal balance of a Contract, exclusive
of any Contract referred to in clause (ii), (iii) or (iv) of the definition of
the term "Liquidated Contract," together with all accrued and unpaid interest
thereon to the date of such payment, or (ii) payment by the Seller or the Master
Servicer, as the case may be, of the purchase price of a Contract in connection
with the purchase of a Contract pursuant to Section 3.02 or 4.07 or payment by
the Seller of the purchase price of a Contract in connection with the purchase
of all Contracts pursuant to Section 9.01.
"Holder" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.
"Holding Account" means the account established and maintained as such
pursuant to Section 5.01.
"Indenture" means the Indenture, dated as of the date hereof, among the
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Seller or WFS,
(ii) is not a director, officer or employee of any Affiliate of the Issuer, the
Seller or WFS, (iii) is not a person related to any
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<PAGE> 17
officer or director of the Issuer, the Seller, WFS or any of their respective
Affiliates, (iv) is not a holder (directly or indirectly) of more than 10% of
any voting securities of Issuer, the Seller, WFS or any of their respective
Affiliates, and (v) is not connected with the Issuer, the Seller or WFS as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
"Insolvency Event" means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (ii) the commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or any other present
or future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or (iii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or any other present or future federal or state, bankruptcy, insolvency
or similar law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or other similar official for such Person or for any substantial part of its
property, or the making by such Person of an assignment for the benefit of
creditors or the failure by such Person generally to pay its debts as such debts
become due or the taking of corporate action by such Person in furtherance of
any the foregoing.
"Insolvency Proceeding" shall have the meaning specified in Section
8.06.
"Insolvency Proceeds" shall have the meaning specified in Section
9.01(b).
"Insurance Agreement" means the Insurance, Indemnity and Pledge
Agreement, dated as of the date hereof, among the Insurer, the Issuer, the
Seller, the Master Servicer, the Company and the Indenture Trustee, the form of
which is attached hereto as Exhibit B.
"Insurance Agreement Obligations" means, as of any date, the aggregate
of amounts owing to the Insurer under the Insurance Agreement as of such date,
other than amounts representing payments made under the Policies for which the
Insurer has not yet been reimbursed.
"Insurance Policy" means, with respect to a Financed Vehicle, the
policies of comprehensive and collision insurance and the LDI Policy.
"Insurance Proceeds" means proceeds paid pursuant to any Insurance
Policy and amounts (exclusive of rebated premiums) paid by any insurer under any
other insurance policy related to a Financed Vehicle, a Contract or an Obligor.
"Insurer" means Financial Security Assurance Inc., and its successors.
"Insurer Insolvency" means (i) the entry of a decree or order for
relief by a court or regulatory authority having jurisdiction in respect of the
Insurer in an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or any other present or future federal or
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<PAGE> 18
state bankruptcy, insolvency, rehabilitation or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Insurer or of any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Insurer and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days, or (ii) the commencement by the Insurer of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future federal or state bankruptcy, insolvency, rehabilitation or
similar law, or the consent by the Insurer to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Insurer or of any substantial part of its
property or the making by the Insurer of an assignment for the benefit of
creditors or the failure by the Insurer generally to pay its debts as such debts
become due or the taking of corporate action by the Insurer in furtherance of
any of the foregoing.
"Interest Period" means, with respect to any Distribution Date, the
period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including October 1, 1999) to but excluding such Distribution Date.
"Interest Rate" means the Class A-1 Rate, the Class A-2 Rate or the
Class A-3 Rate, as the case may be.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts, other than the Holding Account, to be deposited
into the Collection Account on such Distribution Date pursuant to Section
5.01(b).
"Issuer" means the WFS Financial 1999-C Owner Trust.
"LDI Policy" means the limited dual interest policy providing coverage
for physical damage to, or loss of, a Financed Vehicle.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"Liquidated Contract" means a Contract which (i) has been the subject
of a Full Prepayment; (ii) was a Defaulted Contract and with respect to which
the related Financed Vehicle was repossessed and, after any cure period required
by law has expired, the Master Servicer has charged-off any losses prior to the
end of the four-month period referred to in clause (iv); (iii) has been paid in
full on or after its Maturity Date; or (iv) has become delinquent as to all or
part of four or more payments of Monthly P&I.
"Liquidation Expenses" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Master Servicer in connection with the realization of the full amounts due under
any Contract (including the attempted liquidation of a Contract which is brought
current and is no longer in default during such attempted liquidation) and the
sale of any property acquired in respect thereof which are not recoverable under
any Insurance Policy.
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<PAGE> 19
"Liquidation Proceeds" means amounts received by the Master Servicer
(before reimbursement for Liquidation Expenses) in connection with the
realization of the amounts due and to become due under any Defaulted Contract
and the sale of any property acquired in respect thereof.
"Master Servicer" means WFS in its capacity as the master servicer of
the Contracts under Section 4.01, and, in each case upon succession in
accordance herewith, each successor servicer in the same capacity pursuant to
Section 4.01 and each successor master servicer pursuant to Section 8.02.
"Master Servicer Report Date" means, with respect to any Distribution
Date, the fifth Business Day prior to such Distribution Date.
"Maturity Date" means, with respect to any Contract, the date on which
the last scheduled payment of such Contract shall be due and payable (after
giving effect to all Prepayments received prior to the date of determination) as
such date may be extended pursuant to Section 4.02.
"Monthly P&I" means, with respect to any Contract, the amount of each
monthly installment of principal and interest payable to the Obligee of such
Contract in accordance with the terms thereof, exclusive of any charges
allocable to the financing of any insurance premium and charges which represent
late payment charges or extension fees.
"Moody's" means Moody's Investors Service, Inc., and its successors.
"Net Collections" means, with respect to any Distribution Date and the
related Due Period, the sum of (i) all amounts of principal and interest
collected on or in respect of the Contracts during such Due Period (in the case
of principal and interest that are part of any Liquidation Proceeds or Insurance
Proceeds, only to the extent of the related Net Liquidation Proceeds or Net
Insurance Proceeds), less (a) the Retained Yield, if any, (b) any late payments
of interest retained by the Master Servicer as reimbursement for Advances
pursuant to Section 5.04 and (c) any installments of Monthly P&I or Prepayments
retained by the Master Servicer as reimbursement for Nonrecoverable Advances
pursuant to Section 5.04; (ii) the Advance for such Due Period to the extent
actually made; (iii) the investment earnings on funds in the Collection Account
for such Distribution Date (which, except as otherwise provided in Section 5.01,
shall be the RIC Reinvestment Earnings); (iv) amounts withdrawn from the Holding
Account and deposited in the Collection Account in such Due Period pursuant to
Section 5.02; and (v) the aggregate Repurchase Amount for Repurchased Contracts
deposited in or credited to the Collection Account pursuant to Section 5.04(c)
on the related Master Servicer Report Date.
"Net Contract Rate" means, with respect to any Contract, its Contract
Rate less the sum of the Servicing Fee Percent and the Retained Yield Percent.
"Net Insurance Proceeds" means, with respect to any Contract, Insurance
Proceeds net of any such amount applied to the repair of the related Financed
Vehicle, released to the related Obligor in accordance with the normal servicing
procedures of the Master Servicer or representing expenses incurred by the
Master Servicer and recoverable hereunder.
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<PAGE> 20
"Net Liquidation Proceeds" means the amount derived by subtracting from
the Liquidation Proceeds of a Contract the related Liquidation Expenses.
"Nonrecoverable Advance" means any Advance proposed to be made or
previously made by the Master Servicer which, in its good faith judgment, would
not be or will not be ultimately recoverable by the Master Servicer from late
payments, Insurance Proceeds or Liquidation Proceeds.
"Note Balance" means with respect to any Distribution Date, the
aggregate outstanding principal amount of the Class A-2 Notes and Class A-3
Notes, in each case as of the immediately preceding Distribution Date (after
giving effect to any distributions of principal made on such preceding
Distribution Date).
"Note Deficiency Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the amount of Net Collections actually deposited in
the Note Distribution Account on such Distribution Date in accordance with
Section 5.05.
"Note Distributable Amount" means, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.
"Note Distribution Account" means the account established and
maintained as such pursuant to Section 5.01.
"Note Final Distribution Date" means the Class A-1 Final Distribution
Date, the Class A-2 Final Distribution Date and the Class A-3 Final Distribution
Date, as the case may be.
"Note Interest Carryover Shortfall" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the sum of the
Note Interest Distributable Amount for such Class for the immediately preceding
Distribution Date plus any outstanding Note Interest Carryover Shortfall for
such Class on such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account with
respect to such Class on such preceding Distribution Date, plus, to the extent
permitted by applicable law, interest on the amount of interest due but not paid
to Noteholders of such Class on the preceding Distribution Date at the related
Interest Rate for the related Interest Period.
"Note Interest Distributable Amount" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Quarterly Interest
Distributable Amount for such Class of Notes for such Distribution Date and the
Note Interest Carryover Shortfall for such Class of Notes for such Distribution
Date. For all purposes of this Agreement and the other Basic Documents, interest
with respect to the (i) Class A-1 and Class A-2 Notes shall be computed on the
basis of a 360-day year and the actual number of days elapsed since the
immediately preceding Distribution Date (or, with respect to the first
Distribution Date, since October 1, 1999) and (ii) Class A-3 Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
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<PAGE> 21
"Note Percentage" means, (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of the Class A-3
Notes is reduced to zero, 100%; (ii) for the Distribution Date on which the
principal amount of the Class A-3 Notes is reduced to zero, (A) 100% until the
principal amount of the Class A-3 Notes has been reduced to zero and (B) with
respect to any remaining portion of the Principal Distributable Amount, zero;
and (iii) for any Distribution Date thereafter, zero.
"Note Policy" means the financial guaranty insurance policy issued by
the Insurer to the Indenture Trustee on behalf of the Noteholders, the form of
which is attached as Exhibit C hereto.
"Note Policy Claim Amount" means, with respect to each Distribution
Date, the amount, if any, by which the Note Distributable Amount for such
Distribution Date exceeds the sum of (i) the amount of Net Collections actually
deposited in the Note Distribution Account on such Distribution Date in
accordance with Section 5.05 and (ii) the amount of the Note Deficiency Claim
Amount, if any, paid to the Note Distribution Account from the Spread Account
pursuant to a Deficiency Notice delivered for such Distribution Date.
"Note Pool Factor" means, with respect to any Class of Notes as of any
Distribution Date, a six-digit decimal figure equal to the outstanding principal
amount of such Class of Notes (after giving effect to any reductions thereof to
be made on such Distribution Date) divided by the original outstanding principal
amount of such Class of Notes.
"Note Principal Carryover Shortfall" means, as of any Distribution
Date, the excess of the sum of the Note Quarterly Principal Distributable Amount
and any outstanding Note Principal Carryover Shortfall for the immediately
preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Note Distribution Account on such Distribution Date.
"Note Principal Distributable Amount" means, with respect to any
Distribution Date, the sum of the Note Quarterly Principal Distributable Amount
and the Accelerated Principal Distributable Amount, if any, for such
Distribution Date and any outstanding Note Principal Carryover Shortfall for the
immediately preceding Distribution Date; provided, however, that the Note
Principal Distributable Amount with respect to a Class of Notes shall not exceed
the outstanding principal amount of such Class of Notes; and provided, further,
that the Note Principal Distributable Amount on each Note Final Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount of the related Class of Notes to zero.
"Note Quarterly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued for the related Interest Period on each
Class of Notes at the related Interest Rate for such Class on the outstanding
principal amount of the Notes of such Class on the immediately preceding
Distribution Date, after giving effect to all payments of principal to the
Noteholders of such Class on or prior to such Distribution Date (or, in the case
of the first Distribution Date, on the original principal amount of such Class
of Notes).
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"Note Quarterly Principal Distributable Amount" means, with respect to
any Distribution Date, the Note Percentage of the Principal Distributable Amount
for such Distribution Date.
"Note Register" shall have the meaning specified in the Indenture.
"Obligee" means the Person to whom an Obligor is indebted under a
Contract.
"Obligor" on a Contract means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Contract.
"Offered Securities" shall have the meaning specified in Section
6.03(b)(ii).
"Officers' Certificate" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officers' Certificate
of the Master Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Master Servicer.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Master Servicer) acceptable to the Indenture
Trustee or the Owner Trustee, as the case may be, and the Insurer.
"Original Certificate Balance" means $52,500,000
"Original Class A-1 Note Balance" means $224,100,000
"Original Class A-2 Note Balance" means $149,425,000
"Original Class A-3 Note Balance" means $73,975,000
"Original Pool Balance" means $500,000,000
"Outstanding" means,
(i) with respect to a Contract and as of time of reference
thereto, a Contract that has not reached its Maturity Date, has not
been fully prepaid, has not become a Liquidated Contract and has not
been repurchased pursuant to Section 3.02, 4.07 or 9.01; and
(ii) with respect to Securities, as of the date of
determination, all Notes of one Class or of all Classes, all
Certificates or all Notes and Certificates, as the case may be,
theretofore authenticated and delivered except:
(a) Securities theretofore cancelled by the
applicable Registrar or delivered to the applicable Registrar
for cancellation;
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(b) Securities or portions thereof the payment for
which money in the necessary amount has been theretofore
deposited with the applicable Trustee or any Paying Agent, as
the case may be, in trust for the Holders of such Securities
(provided, however, that if such Securities are to be redeemed
or repurchased, notice of such redemption or repurchase has
been duly given or provision for such notice has been made,
satisfactory to the applicable Trustee); and
(c) Securities in exchange for or in lieu of other
Securities which have been authenticated and delivered unless
proof satisfactory to the applicable Trustee is presented that
any such Securities are held by a bona fide purchaser;
provided, however, that Securities which have been paid with proceeds of the
Note Policy or the Certificate Policy, as the case may be, shall continue to
remain Outstanding until the Insurer has been paid as subrogee hereunder or
reimbursed pursuant to the Insurance Agreement as evidenced by a written notice
from the Insurer delivered to the applicable Trustee, and the Insurer shall be
deemed to be the Holder thereof to the extent of any payments thereon made by
the Insurer; provided, further, that in determining whether the Holders of a
specified Outstanding Amount of Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any other
Basic Document, Securities owned by the Issuer, any other obligor upon the
Securities, the Seller, WFS or any of their respective Affiliates shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the applicable Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities that the applicable Trustee knows to be so owned shall be so
disregarded. Securities so owned that have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of the
applicable Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Issuer, any other obligor upon the Securities,
the Seller, WFS or any of their respective Affiliates.
"Outstanding Amount" means the aggregate principal amount of all Notes
of one Class or of all Classes, of all Certificates or of all Securities, as the
case may be, Outstanding at the date of determination.
"Outstanding Principal Balance" means, with respect to a Contract that
is a (i) Rule of 78's Contract, the amount set forth as the Outstanding
Principal Balance of such Contract on the Schedule of Contracts, such amount
being the total of all Monthly P&I due on or after October 1, 1999 less any
unearned interest as of the Due Date for such Contract next preceding October 1,
1999 computed in accordance with the Rule of 78's, less all amounts received on
or in respect of such Contract on or after October 1, 1999 that are allocable to
principal and (ii) Simple Interest Contract, the actual principal balance under
the terms thereof.
"Owner Trustee" means the Person acting as Owner Trustee under the
Trust Agreement, its successors in interest and any successor owner trustee
under the Trust Agreement.
"Owner Trustee Corporate Trust Office" shall have the meaning specified
in the Trust Agreement.
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<PAGE> 24
"Partial Prepayment" means, as to any Rule of 78's Contract, any
partial prepayment received by the Master Servicer that (i) is not accompanied
by an amount specified by the related Obligor to be interest representing
scheduled interest due on any date or dates in any month or months subsequent to
the month of such prepayment and (ii) is required by the terms of such Contract
to be applied to the payment of principal thereunder on or prior to the Due Date
next succeeding the date of receipt.
"Pass-Through Rate" means ______% per annum.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Physical Property" shall have the meaning specified in the definition
of the term "Delivery".
"Policies" means the Note Policy and the Certificate Policy.
"Pool Balance" as of the time of determination means the Aggregate
Scheduled Balance, exclusive of the Scheduled Balances of all Contracts that are
not Outstanding at the end of the Due Period ending immediately prior to such
time of determination.
"Preference Claim" shall have the meaning specified in Section 8.06.
"Preferential Transfer" shall have the meaning specified for the term
"Preference" in the Insurance Agreement.
"Prepayment" means a Full Prepayment or a Partial Prepayment.
"Principal Distributable Amount" means, with respect to any
Distribution Date, the Aggregate Scheduled Balance Decline for such Distribution
Date.
"Proprietary Fund" means money market mutual funds having a rating from
each Rating Agency in the highest investment category granted by each Rating
Agency, including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor.
"Rating Agency" means Moody's and Standard & Poor's.
"Record Date" means, with respect to a Class of Notes or the
Certificates and any Distribution Date, the Business Day immediately preceding
such Distribution Date or, if Definitive Securities are issued, the 15th day of
the month preceding the month in which such Distribution Date occurs.
"Registrar of Titles" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.
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"Repurchase Amount" means, with respect to any Contract, the amount, as
of the date of repurchase, required to prepay in full the principal of and
accrued interest on such Contract to the last Due Date in the Due Period in
which such repurchase occurs.
"Repurchased Contract" means a Contract repurchased as of the related
Master Servicer Report Date by the Master Servicer pursuant to Section 4.07 or
by the Seller pursuant to Section 3.02.
"Responsible Officer" means any officer within the Corporate Trust and
Agency Group (or any successor group of the Indenture Trustee) including any
Vice President, assistant secretary or any other officer or assistant officer of
the Indenture Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at the Indenture Trustee's
Corporate Trust Office because of his knowledge of and familiarity with the
particular subject.
"Retained Yield" shall mean the amount, if any, stripped off from the
interest portion of Monthly P&I by the Servicer and paid to the Seller on a
monthly basis. Such monthly payment shall be equal to (i) with respect to each
Rule of 78's Contract, an amount equal to the product of the Retained Yield
Percent and the Scheduled Balance of such Contract (as specified in the Schedule
of Contracts) for such month, but only to the extent that the Monthly P&I for
such Contract for such month has been collected and (ii) with respect to each
Simple Interest Contract, out of each payment of Monthly P&I collected on such
Contract, an amount equal to interest at the Retained Yield Percent of the
Scheduled Balance of such Contract on which, and for the period for which, the
interest portion of such payment of Monthly P&I was calculated.
"Retained Yield Percent" means, with respect to any Contract, the
lesser of (i) 0% per annum or (ii) a percent per annum equal to the APR of such
Contract less the sum of (A) 1% and (B) the Pass-Through Rate.
"RIC" means the reinvestment contract provided by the Bank and WFAL 2
or, with the prior written consent of the Insurer, a subsidiary thereof,
substantially in the form of Exhibit D hereto, in consideration of the right to
direct the investment of the funds on deposit in all Trust Accounts other than
the Holding Account.
"RIC Reinvestment Earnings" means, with respect to any Distribution
Date, the related Due Period and the Contracts that were Outstanding at the
beginning of such Due Period, the amount by which the sum of the Note Quarterly
Interest Distributable Amount and the Certificate Quarterly Interest
Distributable Amount for such Distribution Date exceeds the sum of (i) the
aggregate amount of interest on the Contracts (adjusted with respect to each
Contract to the Pass-Through Rate and exclusive of such collections that have
been paid to the Master Servicer in reimbursement of a previous Advance) that is
part of Net Collections for such Distribution Date and (ii) the amount of the
Advance as to interest for such Distribution Date (assuming for this purpose
that an Advance was made in respect of each delinquent Contract).
"Rule of 78's Contract" means a Contract as to which payments
thereunder are applied on the basis of the Rule of 78's.
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<PAGE> 26
"Schedule of Contracts" means the list or lists of Contracts attached
as Schedule A to this Agreement, which Contracts are being transferred to the
Owner Trustee as part of the Trust Estate, which list or lists shall set forth
the following information with respect to each such Contract in numbered
columns:
<TABLE>
<CAPTION>
Information Column Number
----------- -------------
<S> <C>
Contract Number ("ACCT NBR").......................................... 2
Date of Origination ("ORG DT")........................................ 9
Maturity Date ("MAT DT").............................................. 15
Monthly P&I ("P&I")................................................... 10
Original Principal Balance ("ORIG AMT")............................... 16 Top
Outstanding Principal Balance ("PRIN BAL")............................ 16 Bottom
Discount Rate ("APR")................................................. 7
</TABLE>
In addition, the Scheduled Balance of each Rule of 78's Contract for each Due
Date on or after October 1, 1999, computed in accordance with the definition of
the term "Scheduled Balance," shall be contained on a computer disk or tape (the
"Disk") that shall be delivered by the Company to the Master Servicer not later
than the fifth Business Day following the Closing Date. The Disk shall be a part
of the Schedule of Contracts and shall be made available by the Master Servicer
to the Indenture Trustee and the Owner Trustee upon reasonable request. In
calculating the outstanding principal balance of each Rule of 78's Contract to
be set forth in Column 16 Bottom, it shall be assumed that all payments of
principal and interest due on or before the Cut-Off Date were received and
applied. The Schedule of Contracts or the Disk shall also set forth the Original
Pool Balance and the Retained Yield Percent (if the Retained Yield Percent is
not the same for all the Contracts).
"Scheduled Balance" means, with respect to any Rule of 78's Contract
for each month and as of the Cut-Off Date, the amount set forth as the
"Scheduled Balance" of such Contract for such month or as of the Cut-Off Date on
the Schedule of Contracts. Each such amount shall be the present value
(determined as provided below) for the applicable month of all payments of
Monthly P&I on the Contract due after such month (due during or after the first
Due Period in the case of a Scheduled Balance at the Cut-Off Date). Such present
value as of a Distribution Date shall be determined by discounting, on a monthly
basis, each such payment of Monthly P&I from the last day of the month in which
such payment of Monthly P&I is due back to the first day of the month during
which such Distribution Date occurs, using the applicable discount rate
specified below. Such present value as of the Cut-Off Date shall be determined
by discounting, on a monthly basis, each such payment of Monthly P&I back from
the last day of the month in which such payment of Monthly P&I is due to the
Cut-Off Date, using the applicable discount rate specified below. The applicable
discount rate (the "Discount Rate") shall be the discount rate that will produce
a present value at the Cut-Off Date equal to the Outstanding Principal Balance
of the Contract. The Scheduled Balance of a Rule of 78's Contract that becomes a
Liquidated Contract or a Repurchased Contract shall be reduced to zero as of the
end of the Due Period in which such Contract became a Liquidated Contract. In
the case of a Simple Interest Contract, the Scheduled Balance thereof is its
actual principal balance. The principal balance of a Simple Interest Contract
that becomes a Repurchased Contract shall be deemed to be reduced to zero upon
the related repurchase thereof and the principal balance of a Simple Interest
Con-
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tract that becomes a Liquidated Contract shall be deemed to be reduced to
zero as of the date on which such Contract becomes a Liquidated Contract. If a
Partial Prepayment is received on any Rule of 78's Contract at any time after
the Cut-Off Date, the Schedule of Contracts shall be revised to reflect the new
Scheduled Balance of such Contract for each Due Date after the date of such
Partial Prepayment, any such recalculations being made in the manner described
above, except that "Outstanding Principal Balance" shall be read to mean
"Distribution Date Outstanding Principal Balance" and "Cut-Off Date" shall be
read to mean the Due Date next succeeding the Due Date after which such Partial
Prepayment was received. As used herein, reference to the Scheduled Balance of a
Contract for a Distribution Date shall mean (i) in the case of a Rule of 78's
Contract, the Scheduled Balance of such Contract on the last day for such
Contract in the Due Period ending immediately prior to such Distribution Date,
and (ii) in the case of a Simple Interest Contract, the Scheduled Balance of
such Contract at the close of business of the last day in such Due Period, and
reference to the Scheduled Balance of a Contract in a month shall mean (i) in
the case of a Rule of 78's Contract, the Scheduled Balance of such Contract for
the last day of such month and (ii) in the case of a Simple Interest Contract,
the Scheduled Balance of such Contract at the close of business on the last day
of such month.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Holders of the Notes and the Certificates.
"Seller" means WFS Financial Auto Loans, Inc., in its capacity as the
Seller of the Contracts under this Agreement, and each successor thereto (in the
same capacity) pursuant to Section 6.03.
"Servicer Default" means an event specified in Section 8.01.
"Servicing Fee" means, as to any Distribution Date, the fee payable to
the Master Servicer for services rendered during the related Due Period, which
shall equal with respect to each Contract that is a (i) Rule of 78's Contract,
the amount equal to, for each month in such Due Period, the product of the
Servicing Fee Percent and the Scheduled Balance of such Contract (as specified
in the Schedule of Contracts) for such month in the related Due Period, but only
to the extent that the Monthly P&I for such Contract for such month has been
collected or advanced by the Master Servicer pursuant to Section 5.04 and (ii)
Simple Interest Contract, out of each payment of Monthly P&I collected or
advanced on such Contract an amount equal to interest at the Servicing Fee
Percent on the Scheduled Balance of such Contract on which, and for the period
for which, the interest portion of such payment of Monthly P&I was calculated.
"Servicing Fee Percent" means one-twelfth of 1.25% per annum.
"Servicing Officer" means any officer of the Master Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Owner Trustee by the Master Servicer pursuant to Section 4.01.
"Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance of such
Contract on such day.
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"Specified Spread Account Balance" means, with respect to any
Calculation Day or Distribution Date, __% of the Aggregate Scheduled Balance on
such date of calculation, except that if on any date of calculation (i) the
Charge-Off Percentage for the three calendar month period ending on such date of
calculation exceeds __% or (ii) the Delinquency Percentage for the three
calendar month period ending on such date of calculation exceeds 2%, then the
Specified Spread Account Balance shall equal 10% of the Aggregate Scheduled
Balance on such date of calculation (but only for so long as such Charge-Off
Percentage or Delinquency Percentage thresholds continue to be exceeded on any
subsequent date of calculation). Notwithstanding the foregoing, in no event
shall the Specified Spread Account Balance be greater than $_______ or less than
$________; provided, however, the Specified Spread Account Balance shall not be
greater than the Outstanding Amount of the Securities if such amount is less
than $__________.
"Spread Account" means the account established and maintained as such
pursuant to Section 5.01.
"Spread Account Initial Deposit" means $__,000,000, 100% of which will
be cash.
"Standard & Poor's" means Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., and its successors in interest.
"Subservicer" means any subservicer engaged by the Master Servicer to
subservice a Contract pursuant to Section 4.01.
"Subservicing Agreement" means an agreement between the Master Servicer
and a Subservicer relating to the servicing of one or more Contracts,
substantially in the form of Exhibit E hereto.
"Title Document" means, with respect to any Financed Vehicle, the
certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including the Spread Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" shall have the meaning specified in Section 5.01(a).
"Trust Agreement" means the Trust Agreement, dated as of October __,
1999, as amended and restated as of November 3, 1999, among the Depositor, the
Company, the Insurer and the Owner Trustee.
"Trust Estate" shall have the meaning specified in the Trust Agreement.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
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"United States" means the United States of America.
"Unreimbursed Insurer Amounts" means, on any date, the amount that is
the sum of (i) all payments (if any) made under the Policies for which the
Insurer has not yet been reimbursed as of such date, plus (ii) all Insurance
Agreement Obligations as of such date.
"Vehicle Receivables" shall have the meaning specified in Section
6.03(b)(ii).
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.
"WFAL 2" means WFS Financial Auto Loans 2, Inc., a wholly-owned
subsidiary of WFS, and its successors and assigns.
"WFS" means WFS Financial Inc, a majority-owned operating subsidiary of
the Bank, and its successors and assigns.
Section 1.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation."
Section 1.03. Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.04. Calculations. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months (or, in the case of the Class A-1 and
Class A-2 Notes, on the basis of a 360-day year and the actual number of days
elapsed since the immediately preceding Distribution Date or October 1, 1999, in
the case of the first Distribution Date) and will be carried out to at least six
decimal places. Collections of interest on Rule of 78's Contracts shall be
calculated as if such Contracts were actuarial contracts the scheduled principal
balances of which are the Scheduled Balances thereof, and collections of
interest on Simple Interest Contracts will be calculated in accordance with the
terms thereof.
Section 1.05. Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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ARTICLE TWO
CONVEYANCE OF CONTRACTS
Section 2.01. Conveyance of Contracts.
(a) In consideration of the Issuer's delivery to or upon the order of
the Seller of $______ less the Spread Account Initial Deposit, effective upon
the Closing Date, the Seller hereby sells, grants, transfers, assigns and
otherwise conveys to the Issuer, without recourse (subject to the obligations
herein), all of the right, title and interest of the Seller (exclusive of (i)
the Retained Yield in respect of the Contracts, and (ii) the amount, if any,
allocable to any rebatable insurance premium financed by any Contract) in, to
and under the Contracts (which Contracts shall be listed in the Schedule of
Contracts), including, without limitation, all payments of Monthly P&I
(exclusive of the Retained Yield, which shall be paid directly to the Seller as
provided in Section 5.02(b)) due on or after October 1, 1999 (excluding the
amount allocable to principal and interest due prior to October 1, 1999); all
Net Liquidation Proceeds and Net Insurance Proceeds with respect to any Financed
Vehicle to which a Contract relates received on or after October 1, 1999 and all
other proceeds received on or in respect of such Contracts (other than payments
of Monthly P&I due prior to October 1, 1999), and any and all security interests
in the Financed Vehicles; the Contract Documents relating to the Contracts
(except the Contract Documents for Contracts which have been the subject of a
Full Prepayment received on or after October 1, 1999 but no later than one
Business Day prior to the Closing Date, in lieu of which the Seller shall have
deposited in or credited to the Collection Account on or prior to the Closing
Date an amount equal to such Full Prepayment); and all proceeds in any way
delivered with respect to the foregoing, all rights to payments with respect to
the foregoing and all rights to enforce the foregoing, provided that
$________________ of the principal amount of Contract number __________ is
retained by the Seller.
(b) The Bank has filed or caused to be filed UCC-1 financing
statements, executed by the Bank as debtor, naming WFS as secured party and
describing the Contracts originated by the Bank and transferred to WFS on or
prior to the Closing Date as collateral with the Office of the Secretary of
State of the State of California. WFS has filed or caused to be filed UCC-1
financing statements executed by WFS as debtor, naming the Seller as secured
party and describing the Contracts as collateral with the office of the
Secretary of State of the State of California. The Seller has filed or caused to
be filed UCC-1 financing statements, executed by the Seller as debtor, naming
the Collateral Agent, on behalf of the Insurer, as secured party and describing
the Contracts as collateral, with the Office of the Secretary of State of the
State of California. The grant of a security interest to the Collateral Agent on
behalf of the Insurer and the rights of the Collateral Agent and the Insurer in
respect of such security interest shall be governed by the Insurance Agreement.
The Seller has filed or caused to be filed UCC-1 financing statements, executed
by the Seller as debtor, naming the Owner Trust as secured party and describing
the Contracts being sold by it to the Owner Trust as collateral, with the Office
of the Secretary of State of the State of California. The Owner Trust has filed
or caused to be filed UCC-1 financing statements, executed by the Owner Trust as
debtor, naming the Indenture Trustee, on behalf of the Noteholders, as secured
party and describing the Contracts as collateral, with the office of the
Secretary of State of the States of Delaware and California. The grant of a
security interest to the Indenture Trustee and the rights of the Indenture
Trustee in the Contracts shall be governed
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by the Indenture. From time to time, the Master Servicer shall cause to be taken
such actions as are necessary to continue the perfection of the respective
interests of the Indenture Trustee, the Owner Trust and the Collateral Agent on
behalf of the Insurer in the Contracts and to continue the first priority
security interest of the Indenture Trustee (subject to the security interest of
the Insurer pursuant to the Insurance Agreement) in the Financed Vehicles and
their proceeds (other than, as to such priority, any statutory lien arising by
operation of law after the Closing Date which is prior to such interest),
including, without limitation, the filing of financing statements, amendments
thereto or continuation statements and the making of notations on records or
documents of title.
If any change in the name, identity or corporate structure of the
Seller or WFS or the relocation of the chief executive office of any of them
would make any financing or continuation statement or notice of lien filed under
this Agreement or the other Basic Documents seriously misleading within the
meaning of applicable provisions of the UCC or any title statute, the Master
Servicer, within the time period required by applicable law, shall file such
financing statements or amendments as may be required to preserve and protect
the interests of the Indenture Trustee, the Owner Trustee, the Securityholders
and the Insurer in the Contracts, Financed Vehicles and the proceeds thereof.
Promptly thereafter, the Master Servicer shall deliver to the Indenture Trustee,
the Owner Trustee and the Insurer an Opinion of Counsel stating that, in the
opinion of such counsel, all financing statements or amendments necessary fully
to preserve and protect the interests of the Indenture Trustee, the Owner
Trustee, Securityholders and the Insurer in the Contracts, Financed Vehicles and
the proceeds thereof have been filed, and reciting the details of such filings.
During the term of this Agreement, the Seller and WFS shall each
maintain its chief executive office in one of the states of the United States,
other than Louisiana or Tennessee.
The Master Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Indenture Trustee's right, title and interest in and to
the Contracts and in connection with maintaining the first priority security
interest (subject to the security interest of the Insurer pursuant to the
Insurance Agreement) in the Financed Vehicles and the proceeds thereof.
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ARTICLE THREE
THE CONTRACTS
Section 3.01. Representations and Warranties of the Seller. The Seller
hereby makes the following representations and warranties on which (i) the
Issuer is deemed to have relied in acquiring the Contracts and (ii) the Insurer
is deemed to have relied in issuing the Policies. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date, but shall survive the sale, transfer and assignment of the
Contracts to the Issuer and the pledge thereof to the Indenture Trustee pursuant
to the Indenture.
(a) As to the Seller:
(i) Organization and Good Standing. The Seller is duly
organized and validly existing as a corporation in good standing under
the laws of the State of California, with power and authority to own
its properties and to conduct its business, and has the corporate
power, authority and legal right to acquire and own the Contracts.
(ii) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals, in all jurisdictions in
which the ownership or lease of property or the conduct of its business
shall require such qualifications.
(iii) Power and Authority. The Seller has the corporate power
and authority to execute and deliver this Agreement and to carry out
its terms; the Seller has full power and authority to sell and assign
the property to be sold and assigned to and deposited with the Issuer,
and has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance
of this Agreement has been duly authorized by the Seller by all
necessary corporate action.
(iv) Binding Obligation. This Agreement constitutes (A) a
valid sale, transfer and assignment of the Contracts, enforceable
against creditors of and purchasers from the Seller and (B) a legal,
valid and binding obligation of the Seller enforceable in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall
be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or bylaws of the Seller,
or any indenture, agreement or other instrument to which the Seller is
a party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents to which the Seller is a party); nor
violate any law or, to the best of the Seller's knowledge, any order,
rule or regulation applicable to the Seller of
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any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over
the Seller or its properties.
(vi) No Proceedings. There are no proceedings or
investigations pending, or to the Seller's best knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties: (A) asserting the invalidity of this Agreement or any of
the other Basic Documents, the Notes or the Certificates, (B) seeking
to prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement
or any of the other Basic Documents, (C) seeking any determination or
ruling that might materially and adversely affect the performance by
the Seller of its obligations under, or the validity or enforceability
of, this Agreement, any of the other Basic Documents, the Notes or the
Certificates or (D) which might adversely affect the federal or state
income tax attributes of the Notes or the Certificates.
(b) As to each Contract or all of the Contracts, as the case may be:
(i) Schedule of Contracts. The information pertaining to such
Contract set forth in the related Schedule of Contracts was true and
correct in all material respects at the Closing Date and the
calculations of the Scheduled Balances appearing in such Schedule of
Contracts for each such Contract at the Closing Date and at each
Distribution Date thereafter prior to the related Maturity Date have
been performed in accordance with this Agreement and are accurate.
(ii) Security Interests. As of the Closing Date, such Contract
granted a valid and enforceable first priority security interest in
favor of WFS (or to the Bank, which security interest has been assigned
to WFS) in the related Financed Vehicle, and such security interest has
been duly perfected and is prior to all other liens upon and security
interests in such Financed Vehicle which now exist or may hereafter
arise or be created (except, as to priority, for any lien for unpaid
taxes or unpaid storage or repair charges which may arise after the
Closing Date).
(iii) Title Documents. (A) If the related Financed Vehicle was
originated in a state in which notation of a security interest on the
Title Document is required or permitted to perfect such security
interest, the Title Document for such Financed Vehicle shows, or if a
new or replacement Title Document is being applied for with respect to
such Financed Vehicle the Title Document will be received within 180
days of the Closing Date and will show WFS named as the original
secured party under the related Contract as the holder of a first
priority security interest in such Financed Vehicle, and (B) if the
related Financed Vehicle was originated in a state in which the filing
of a financing statement under the UCC is required to perfect a
security interest in motor vehicles, such filings or recordings have
been duly made and show WFS named as the original secured party under
the related Contract, and in either case, the Indenture Trustee and the
Owner Trustee have the same rights as such secured party has or would
have (if such secured party were still the owner of the Contract)
against all parties claiming an interest in such Financed Vehicle. With
respect to each Contract for which the Title Document has not yet been
returned from the Registrar of Titles, WFS has received
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written evidence from the related Dealer that such Title Document
showing WFS as first lienholder has been applied for.
(iv) Title to the Contracts. Immediately prior to the issuance
of the Notes and the Certificates, the Seller had good and indefeasible
title to and was the sole owner of each Contract to be transferred to
the Issuer pursuant to Section 2.01 free of liens, claims, encumbrances
and rights of others and, upon transfer of such Contract to the Issuer
pursuant to Section 2.01, the Issuer will have good and indefeasible
title to and will be the sole owner of such Contract free of liens,
encumbrances and rights of others, except for the Lien of the Indenture
Trustee under the Indenture and the security interest granted to the
Insurer under the Insurance Agreement.
(v) Current in Payment. As of the Cut-Off Date, such Contract
is no more than 30 days delinquent in payment as to all or any portion
of any installment of Monthly P&I.
(vi) Tax Liens. As of the Closing Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(vii) Rescission, Offset, Etc. As of the Closing Date, there
is no right of rescission, offset, defense or counterclaim to the
obligation of the Obligor to pay the unpaid principal or interest due
under such Contract; the operation of the terms of such Contract or the
exercise of any right thereunder will not render such Contract
unenforceable in whole or in part or subject to any right of
rescission, offset, defense or counterclaim, and no such right of
rescission, offset, defense or counterclaim has been asserted.
(viii) Mechanics' Liens. As of the Closing Date, there are no
liens or claims for work, labor, material or storage affecting the
related Financed Vehicle which are or may become a lien prior to or
equal with the security interest granted by such Contract.
(ix) Compliance with Laws. Such Contract, and the sale of the
Financed Vehicle sold thereunder, complied, at the time it was made, in
all material respects with all applicable state and federal laws (and
regulations thereunder), including without limitation usury, equal
credit opportunity, fair credit reporting, truth-in-lending or other
similar laws, the Federal Trade Commission Act, and applicable state
laws regulating retail installment sales contracts and loans in general
and motor vehicle retail installment contracts and loans in particular;
and the consummation of the transactions herein contemplated,
including, without limitation, the transfer of ownership of the
Contracts to the Issuer and the receipt of interest by the
Securityholders, will not involve the violation of any applicable state
or federal law.
(x) Valid and Binding. Such Contract is the legal, valid and
binding obligation of the Obligor thereunder and is enforceable in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally; all parties to such Contract had full
legal capacity to execute and deliver such Contract and all other
documents related thereto and to grant the security interest purported
to be granted thereby; and the terms of such
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Contract have not been waived or modified in any respect, except by
instruments that are part of the Contract Documents.
(xi) Enforceability. Such Contract contains customary and
enforceable provisions such as to render the rights and remedies of the
holder or assignee thereof adequate for the realization against the
collateral of the benefits of the security, subject, as to
enforceability, to bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights generally.
(xii) No Default. As of the Cut-Off Date, there was no
default, breach, violation or event permitting acceleration existing
under such Contract (except payment delinquencies permitted by
subparagraph (v) above) and no event which, with notice and the
expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such
Contract, and the Seller has not waived any such default, breach,
violation or event permitting acceleration except payment delinquencies
permitted by subparagraph (v) above.
(xiii) Insurance. At the Closing Date, the related Financed
Vehicle will be covered by (A) a comprehensive and collision insurance
policy (i) in an amount at least equal to the lesser of (a) its actual
cash value or (b) the principal amount due from the Obligor under the
related Contract, (ii) naming WFS as a loss payee and (iii) insuring
against loss and damage due to fire, theft, transportation, collision
and other risks generally covered by comprehensive and collision
coverage or (B) an LDI Policy; provided, however, that if such Financed
Vehicle has an unpaid principal balance of less than $4,000.00 or the
related Contract has six or fewer months remaining before its Maturity
Date, it will not be required to be covered by the insurance described
in this subparagraph. Each of the Seller, WFS and the Master Servicer
shall at all times comply with all of the provisions of such insurance
policies and the LDI Policy applicable to such Financed Vehicle.
(xiv) Acquisition of Contract. Such Contract was either
acquired by WFS (or its predecessor in interest) from a Dealer with
which it ordinarily does business or originated directly by WFS in the
ordinary course of its business, and no adverse selection procedures
have been utilized in selecting such Contract from all other similar
contracts purchased by the Seller.
(xv) Scheduled Payments. As of the Cut-Off Date, scheduled
payments under such Contract are applied in accordance with the Rule of
78's method or the simple interest method and are due monthly in level
payments through its Maturity Date sufficient to fully amortize the
principal balance of such Contract by its Maturity Date, assuming
timely payment by Obligors on Simple Interest Contracts, except that
the payment in the first or last month in the life of the Contract may
be minimally different from the level payment.
(xvi) One Original. There is only one original of such
Contract and such original, together with all other Contract Documents,
is being held by the Master Servicer pursuant to Section 3.04. Each
original Contract has been segregated and marked to
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show the Issuer as owner thereof, unless the Insurer has waived the
requirement for such segregation and marking by notice in writing to
the Owner Trustee, the Indenture Trustee and the Master Servicer.
(xvii) Characteristics. At the Cut-Off Date such Contract had
(i) an Outstanding Principal Balance of not less than $529.23 nor more
than $53,051.98, (ii) an original term not less than 7 months nor
greater than 84 months, (iii) a remaining maturity of not less than 3
months nor greater than 84 months, (iv) a Contract Rate at least equal
to the Pass-Through Rate plus the sum of the Servicing Fee Percent and
the Retained Yield Percent and (v) an APR of not less than 5.90%.
(xviii) Identification. The Master Servicer and WFS have
clearly marked their electronic records to indicate that such Contract
is owned by the Issuer.
(xix) Maturity. At the Cut-Off Date such Contract did not have
a Maturity Date later than the 90th day prior to the end of the Due
Period immediately preceding the Certificate Final Distribution Date.
(xx) Scheduled Balance. At the Cut-Off Date the initial
Scheduled Balance of such Contract was not greater than the purchase
price of the related vehicle.
(xxi) Location of Contract Files. The Contract Files are kept
at one or more of the locations listed in Schedule B hereto.
(xxii) Finance Charge. Such Contract provides for the payment
of a finance charge calculated at its APR based on the Rule of 78's or
the simple interest method and such APR shall be equal to or greater
than ______% for Rule of 78's Contracts and equal to or greater than
______% for Simple Interest Contracts.
(xxiii) Bank Originations. The aggregate Scheduled Balance as
of the Cut-Off Date of Contracts purchased or originated by the Bank is
not more than approximately 1.00% of the aggregate Scheduled Balance of
all Contracts as of such date.
(xxiv) Simple Interest Contracts. As of the Cut-Off Date,
approximately 10.78% of the aggregate Scheduled Balances of the
Contracts shall be Simple Interest Contracts and approximately 89.22%
of the aggregate Scheduled Balances of the Contracts shall be Rule of
78's Contracts.
(xxv) New or Used Vehicles. Approximately 74.59% of the
Contracts by Cut-Off Date Aggregate Scheduled Balance shall be new
vehicles and approximately 25.41% shall be used vehicles.
(xxvi) States of Origination. Approximately ______% of the
Contracts by Cut-Off Date Aggregate Scheduled Balance were originated
by WFS or the Bank in California and approximately 59.72% of the
Contracts by Cut-Off Date Aggregate Scheduled Balance were originated
in states other than California.
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(xxvii) No Government Entity Obligors. Each Contract shall
have an Obligor that is not a local, state or federal governmental
entity.
Section 3.02. Purchase of Certain Contracts. The representations and
warranties of the Seller set forth in Section 3.01 shall survive delivery of the
Contract Documents to the Owner Trustee and shall continue until the termination
of this Agreement. Upon discovery by the Seller, the Master Servicer or the
Owner Trustee, as the case may be, that any of such representations and
warranties was incorrect as of the time made or that any of the Contract
Documents relating to any such Contract has not been properly executed by the
Obligor or contains a material defect or has not been received by the Owner
Trustee, such Person making such discovery shall give prompt notice to the other
such Persons. If any such defect, incorrectness or omission materially and
adversely affects the interest of the Noteholders, the Certificateholders, the
Indenture Trustee, the Owner Trustee, the Issuer or the Insurer, the Seller
shall, within 90 days after discovery thereof or receipt of notice thereof, cure
the defect or eliminate or otherwise cure the circumstances or condition in
respect of which such representation or warranty was incorrect as of the time
made. If the Seller is unable to do so, it shall purchase such Contract on the
Master Servicer Report Date next succeeding the end of such 90-day period from
the Issuer for an amount equal to the related Repurchase Amount in the manner
set forth in Section 5.04. Upon any such purchase, the Owner Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in the Seller any Contract
purchased hereunder. The sole remedy of the Issuer, the Owner Trustee, the
Indenture Trustee or the Securityholders with respect to a breach of the
Seller's representations and warranties pursuant to Section 3.01 shall be to
require the Seller to enforce the Master Servicer's obligation to repurchase
Contracts pursuant to Section 4.07; provided, however, that the Seller shall
indemnify the Owner Trustee, the Indenture Trustee, the Insurer, the Issuer and
the Securityholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach.
Section 3.03. Custody of Contract Files. Subject to Sections 3.07, 7.04
and 8.01, the Owner Trustee hereby irrevocably appoints the Master Servicer, and
the Master Servicer hereby accepts such appointment, to act as the agent of the
Owner Trustee as custodian of the Contract Documents and any and all other
documents that the Master Servicer shall keep on file, in accordance with its
customary procedures, relating to a Contract, Obligor or Financed Vehicle, which
are hereby constructively delivered to the Owner Trustee with respect to each
Contract:
(i) the original of the Contract;
(ii) documents evidencing the existence of physical damage
insurance covering the Financed Vehicles;
(iii) the original credit application fully executed by the
Obligor; and
(iv) the original certificate of title or such documents that
the Master Servicer shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Master
Servicer in the Financed Vehicle.
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The Master Servicer shall maintain the Contract Documents held by it
(by itself or through one or more Subservicers) in a file area physically
separate from the other installment sales contracts and installment loans owned
or serviced by it or any of its Affiliates, which area shall be clearly marked
to indicate the Trust as the owner of, and the security interest of the
Indenture Trustee and the Insurer in, the Contract Documents and shall mark the
Contracts in the same manner; except that if the Indenture Trustee and the
Insurer have waived the requirement for such segregation and marking by notice
in writing to the Owner Trustee, the Indenture Trustee and the Master Servicer,
such file area may contain contract documents for other motor vehicle retail
installment sales contracts and installment loans owned or serviced by the
Master Servicer.
The Master Servicer shall cause the electronic record of the Contracts
maintained by it to be clearly marked to indicate that the Contracts have been
sold to the Trust and shall not in any way assert or claim an ownership interest
in the Contracts. It is intended by the Master Servicer's and the Seller's
agreement pursuant to this Section that the Owner Trustee shall be deemed to
have possession of the Contract Documents for purposes of Section 9-305 of the
UCC of the state in which the Contract Documents are located.
Section 3.04. Duties of Master Servicer as Custodian.
(a) Safekeeping. The Master Servicer shall hold the Contract Files on
behalf of the Owner Trustee, the Indenture Trustee and the Insurer for the use
and benefit of all present and future Securityholders, and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Contract File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian the Master Servicer shall act with reasonable
care, using that degree of skill and attention that the Master Servicer
exercises with respect to the files relating to all comparable automobile
contracts that the Master Servicer owns or services for itself or others. The
Master Servicer shall conduct, or cause to be conducted, periodic physical
inspections of the Contract Files held by it under this Agreement and of the
related accounts, records and computer systems, and shall maintain them in such
a manner as shall enable the Owner Trustee, the Indenture Trustee and the
Insurer to verify the accuracy of the Master Servicer's record keeping. The
Master Servicer shall promptly report to the Owner Trustee, the Indenture
Trustee and the Insurer any failure on its part to hold the Contract Files and
maintain its accounts, records and computer systems as herein provided and shall
promptly take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Master Servicer shall
maintain each Contract File at one of its offices specified in Schedule B hereto
or at such other location as shall be specified to the Owner Trustee, the
Indenture Trustee and the Insurer by 30 days' prior written notice. The Master
Servicer shall permit the Owner Trustee, the Indenture Trustee and the Insurer
or their respective duly authorized representatives, attorneys or auditors to
inspect the Contract Files and the related accounts, records and computer
systems maintained by the Master Servicer at such times as such Persons may
request.
(c) Release of Documents. Upon instruction from the Indenture Trustee
(a copy of which shall be furnished to the Owner Trustee and the Insurer), the
Master Servicer shall release any Contract File to the Indenture Trustee, the
Indenture Trustee's agent, or the Indenture
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Trustee's designee, as the case may be, at such place or places as the Indenture
Trustee may designate, as soon as practicable.
(d) Monthly Reports. On the tenth Business Day of each month, other
than a month in which a Distribution Date occurs, commencing with the month next
succeeding the month of the Closing Date, the Master Servicer shall mail to the
Indenture Trustee and the Owner Trustee, by first class mail, a certificate of a
Servicing Officer stating (i) the Contract Number and outstanding principal
balance of each Contract that has become a Liquidated Contract since the
Business Day next preceding the date of the last certificate delivered pursuant
to this subsection (or since the Closing Date in the case of the first such
certificate); (ii) that all proceeds received in respect of such Contract have
been deposited in or credited to the Collection Account or Holding Account as
required by Section 5.02; (iii) that, if such Contract has been the subject of a
Full Prepayment pursuant to clause (i) of the definition of the term "Full
Prepayment" or is a Liquidated Contract pursuant to clause (iii) of the
definition of the term "Liquidated Contract," all proceeds received in respect
thereof have been deposited in or credited to the Collection Account or Holding
Account in accordance with Section 5.02; (iv) that, if such Contract has been
the subject of a Full Prepayment pursuant to clause (ii) of the definition of
the term "Full Prepayment," the correct Repurchase Amount has been deposited in
or credited to the Collection Account in accordance with Section 4.07 or 5.04;
(v) that, if such Contract is a Liquidated Contract pursuant to clause (ii) of
the definition of the term "Liquidated Contract," there have been deposited in
or credited to the Collection Account or Holding Account the related Net
Liquidation Proceeds in accordance with Section 5.02; (vi) the current Aggregate
Scheduled Balance; (vii) the total dollar amount of charged-off Contracts;
(viii) the total dollar amount of delinquent Contracts; (ix) the total dollar
amount of all Contracts in respect of which the related Financed Vehicles have
been repossessed but have not been liquidated; (x) the current Charge-off
Percentage; and (xi) the current Delinquency Percentage. The information called
for in clauses (vi) through (xi) above shall be presented as of the Business Day
next preceding the date of the last certificate so delivered.
(e) Title Documents. The Master Servicer shall deliver to the Indenture
Trustee, the Owner Trustee and the Insurer (i) within 120 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles which, as of the
Closing Date did not show the Master Servicer as first lienholder and (ii)
within 180 days of the Closing Date, a schedule of Title Documents for Financed
Vehicles which as of the date prior to such delivery do not show the Master
Servicer as first lienholder and as to which the Seller is obligated to
repurchase pursuant to the provisions hereof.
Section 3.05. Instructions; Authority to Act. The Master Servicer shall
be deemed to have received proper instructions (a copy of which shall be
furnished to the Owner Trustee and the Insurer) with respect to the Contract
Files upon its receipt of written instructions signed by a Responsible Officer
of the Indenture Trustee.
Section 3.06. Indemnification. Subject to Section 8.02, the Master
Servicer shall indemnify the Trust, the Owner Trustee, the Indenture Trustee,
the Insurer and the Securityholders for any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses of any kind whatsoever
(including the reasonable fees and expenses of counsel) that may be imposed on,
incurred by or asserted against the Trust, the Owner Trustee, the Indenture
Trustee,
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the Insurer, the Noteholders or the Certificateholders as the result of any
improper act or omission in any way relating to the maintenance and custody by
the Master Servicer of the Contract Files, or the failure of the Master Servicer
to perform its duties and service the Contracts in compliance with the terms of
this Agreement; provided, however, that the Master Servicer shall not be liable
to the Owner Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee and the Master
Servicer shall not be liable to the Indenture Trustee for any portion of any
such amount resulting from the willful misfeasance, bad faith or negligence of
the Indenture Trustee. The Master Servicer shall also indemnify and hold
harmless the Trust, the Trust Estate and the Securityholders against any taxes
that may be asserted at any time against any of them with respect to the
Contracts, including any sales, gross receipts, general corporation, personal
property, privilege or license taxes (but exclusive of federal or other income
taxes arising out of payments on the Contracts) and the costs and expenses in
defending against such taxes. The Master Servicer shall immediately notify the
Owner Trustee and the Indenture Trustee if a claim is made by a third party with
respect to the Contracts, shall assume, with the consent of the Owner Trustee
and the Indenture Trustee, the defense of any such claim, pay all expenses in
connection therewith, including counsel fees, and shall promptly pay, discharge
and satisfy any judgment or decree which may be entered against it or the Trust.
Section 3.07. Effective Period and Termination. The Master Servicer's
appointment as custodian shall become effective as of the Cut-Off Date and shall
continue in full force and effect until terminated under to this Section or
until the Certificate Final Distribution Date. If the Master Servicer shall
resign in accordance with the provisions of this Agreement or if all of the
rights and obligations of the Master Servicer shall have been terminated
pursuant to Section 8.01, the appointment of the Master Servicer as custodian
shall be terminated by the Indenture Trustee, by the Holders of Notes evidencing
not less than 51% of the Outstanding Amount of the Notes, by the Owner Trustee,
by Certificateholders evidencing not less than 51% of the Certificate Balance,
or by the Insurer, in the same manner as the Indenture Trustee, the Owner
Trustee, the Insurer or such Holders may terminate the rights and obligations of
the Master Servicer pursuant to Section 8.01. As soon as practicable after any
termination of such appointment, the Master Servicer shall, at its own expense,
deliver the Contract Files to the Owner Trustee or its agent at such place or
places as the Owner Trustee may reasonably designate and shall cooperate in good
faith to effect such delivery.
Section 3.08. Nonpetition Covenant.
(a) Neither the Seller nor the Master Servicer shall petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Trust under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or any substantial part of its property, or ordering the winding up
or liquidation of the affairs of the Trust.
(b) The Master Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
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official of the Seller or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Seller.
Section 3.09. Collecting Title Documents Not Delivered at the Closing
Date. In the case of any Contract in respect of which written evidence from the
Dealer selling or transferring the related Financed Vehicle that the Title
Document for such Financed Vehicle showing the Master Servicer as first
lienholder has been applied for from the Registrar of Titles was delivered to
the Owner Trustee on the Closing Date in lieu of a Title Document, the Master
Servicer shall use its best efforts to collect such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing the
Master Servicer as first lienholder is not received by the Master Servicer or
the related Subservicer within 180 days after the Closing Date, then the
representation and warranty in Section 3.01(b)(iii) in respect of such Contract
shall be deemed to have been incorrect in a manner that materially and adversely
affects the Certificateholders.
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ARTICLE FOUR
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 4.01. Duties of Master Servicer. The Master Servicer, acting alone
and/or through one or more Subservicers as provided in this Section, shall, as
agent for the Indenture Trustee, the Owner Trustee and the Insurer, manage,
service, administer and make collections on the Contracts. The Master Servicer
agrees that its servicing of the Contracts shall be carried out in accordance
with customary and usual procedures of financial institutions which service
motor vehicle retail installment sales contracts and installment loans and, to
the extent more exacting, the procedures used by the Master Servicer in respect
of such contracts serviced by it for its own account. In accordance with the
foregoing, the Master Servicer may, whenever an Obligor has become delinquent or
the Master Servicer believes an Obligor may become delinquent, in order to
preserve the ultimate collectability of amounts due on a Contract, modify the
payment schedule on any Contract by reducing the APR on such Contract without
the consent of the Insurer or any Rating Agency; provided, however, that the new
APR shall not be less than the sum of (i) the Pass-Through Rate, (ii) the
Servicing Fee Percent and (iii) the Retained Yield Percent. In addition, in
order to preserve the Trust Estate, the Master Servicer may, without the consent
of any Rating Agency or the Insurer, reduce the principal amount of a Contract
(i.e., write-down a portion of the principal amount due on such Contract and,
accordingly, lower the Monthly P&I on such Contract) to the extent funds are
available in the Spread Account to cover such reduction; provided however, the
total amount of such modifications pursuant to the immediately preceding
sentence and this sentence and reductions (i) may not affect more than 1% of the
Original Pool Balance through the Certificate Final Distribution Date and (ii)
during each three-month period between Distribution Dates (or in the case of the
first Distribution Date, from the Cut-Off Date to such Distribution Date) shall
not affect Contracts having an aggregate Scheduled Balance greater than 10/100
of one percent of the Pool Balance at the beginning of such period. Any such
modifications or reductions exceeding such limits may be made only with the
consent of the Insurer and each Rating Agency. The Master Servicer may also
extend the Maturity Date on a Contract in accordance with Section 4.02. The
Master Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on the Contracts, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee, the Owner Trustee and the Insurer with respect to
distributions and filing applicable U.S. tax returns for the Trust on an annual
basis, based on a tax year for the Trust that is the calendar year. The Master
Servicer shall have, subject to the terms hereof, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable; provided, however, that the Master Servicer shall commence
repossession efforts in respect of any Financed Vehicle respecting which the
related Contract is four or more months delinquent. Without limiting the
generality of the foregoing, but subject to the provisions of this Agreement,
the Master Servicer is authorized and empowered by the Indenture Trustee and the
Owner Trustee to execute and deliver, on behalf of itself, the Trust, the
Insurer, the Noteholders, the Certificateholders, the Indenture Trustee, the
Owner Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Contracts or to the Financed
Vehicles. The Owner Trustee shall furnish the Master
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Servicer all documents necessary or appropriate to enable the Master Servicer to
carry out its servicing and administrative duties hereunder.
On the Closing Date, the Master Servicer shall deliver to the Insurer,
the Indenture Trustee and the Owner Trustee a list of Servicing Officers
involved in, or responsible for, the administration and servicing of the
Contracts, which list shall from time to time be updated by the Master Servicer
on request of the Owner Trustee, the Indenture Trustee or the Insurer.
The Master Servicer may enter into Subservicing Agreements with one or
more Subservicers approved by the Insurer for the servicing and administration
of certain of the Contracts (including holding the related Contract Files as
custodian). The Master Servicer shall notify each Rating Agency promptly if a
Subservicer is hired. References herein to actions taken or to be taken by the
Master Servicer in servicing the Contracts include actions taken or to be taken
by a Subservicer on behalf of the Master Servicer and the Insurer. Each
Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer
have agreed. With the approval of the Master Servicer and the Insurer, a
Subservicer may delegate its servicing obligations to third-party servicers, but
such Subservicer will remain obligated under the related Subservicing Agreement.
The Master Servicer and a Subservicer may enter into amendments thereto or
different forms of Subservicing Agreements and the form attached as Exhibit E
hereto is merely provided for information and shall not be deemed to limit in
any respect the discretion of the Master Servicer to modify or enter into
different Subservicing Agreements; provided, however, that any such amendments
or different forms shall be consistent with and not violate the provisions of
this Agreement or materially adversely affect the rights of Noteholders,
Certificateholders or the Insurer hereunder.
The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the related Subservicer, the Master Servicer
shall either act directly as servicer of the related Contract or enter into a
Subservicing Agreement with a successor Subservicer approved by the Insurer
which will be bound by the terms of the related Subservicing Agreement.
Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or a Subservicer or reference to actions taken through such Persons or
otherwise, the Master Servicer shall remain obligated and liable to the
Indenture Trustee, the Owner Trustee and the Securityholders for the servicing
and administering of the Contracts in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from a
Subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Contracts. The
Master Servicer shall be entitled to enter into an agreement with a Subservicer
for indemnification of the Master Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
Any Subservicing Agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts involving a
Subservicer or other Affiliate of the
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Master Servicer in its capacity as such and not as an originator shall be deemed
to be between the Subservicer or such other Affiliate, as the case may be, and
the Master Servicer alone, and none of the Indenture Trustee, the Owner Trustee,
the Noteholders nor the Certificateholders shall be deemed parties thereto and
shall have no claims, rights, obligations, duties or liabilities with respect to
the Subservicer except as set forth in the immediately succeeding paragraph;
provided that the Insurer may rely upon the representations and warranties of
the Subservicer contained therein.
In the event the Master Servicer shall for any reason no longer be a
servicer (including, but not limited to, by reason of an Event of Default), the
Indenture Trustee or its designee may, at the sole discretion of the Indenture
Trustee, thereupon assume all of the rights and obligations of such Master
Servicer under each Subservicing Agreement selected by the Indenture Trustee in
its sole discretion. In such event, the Indenture Trustee, its designee or the
successor servicer for the Indenture Trustee shall be deemed to have assumed all
of the Master Servicer's interest therein and to have replaced the Master
Servicer as a party to each such Subservicing Agreement to the same extent as if
such Subservicing Agreement had been assigned to the assuming party except that
the Master Servicer shall not thereby be relieved of any liability or
obligations under the Subservicing Agreement. The Master Servicer shall, upon
request of the Indenture Trustee but at the expense of the Master Servicer,
deliver to the assuming party all documents and records relating to each such
Subservicing Agreement and the Contracts then being serviced and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Subservicing Agreement to the assuming
party.
On the Closing Date, the Master Servicer shall deposit in the
Collection Account (i) all installments of Monthly P&I due on or after October
1, 1999 and received by the Master Servicer at least two Business Days prior to
the Closing Date; (ii) the proceeds of each Prepayment (excluding any portion
allocable to principal and interest due before October 1, 1999) of any such
Contract received by the Master Servicer on or after October 1, 1999 but no
later than two Business Days prior to the Closing Date; and (iii) all Net
Liquidation Proceeds and Net Insurance Proceeds realized in respect of a
Financed Vehicle at least two Business Days prior to the Closing Date.
Subject to Section 5.02 respecting deposits in the Holding Account, the
Master Servicer shall deposit in or credit to the Collection Account within two
Business Days of receipt all collections of Monthly P&I due on or after October
1, 1999 received by it on or in respect of the Contracts together with the
proceeds of all Prepayments and any accompanying interest; provided, however,
that, to the extent any such installment of Monthly P&I or any such Prepayment
proceeds are received in respect of a Contract as to which there is an
outstanding and unreimbursed Advance or Advances, such installment or proceeds
shall, to the extent of any such unreimbursed Advance or Advances, be retained
by the Master Servicer in reimbursement of itself. The Master Servicer shall
likewise deposit in the Collection Account within two Business Days of receipt
all Net Liquidation Proceeds and Net Insurance Proceeds after deducting
therefrom the amount of any outstanding and unreimbursed Advances made by it in
respect of such Contract. The foregoing notwithstanding, the Master Servicer
may, in the event it determines that it has made a Nonrecoverable Advance or
Advances, reimburse itself from unrelated installments of Monthly P&I or
Prepayment proceeds to the extent it shall, concurrently with the withholding of
any such installment or proceeds from deposit in or credit to the Collection
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Account as required above, furnish to the Indenture Trustee, the Owner Trustee
and the Insurer a certificate of a Servicing Officer setting forth the basis for
the Master Servicer's determination, the amount of and Contract with respect to
which such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken. The foregoing
requirements for deposit in the Collection Account are exclusive, it being
understood that collections in the nature of late payment charges or extension
fees or collections allocable to payments to be made by the Master Servicer on
behalf of Obligors for payment of insurance premiums or similar items need not
be deposited in the Collection Account and may be retained by the Master
Servicer as additional servicing compensation or for application on behalf of
Obligors, as the case may be.
Amounts otherwise required to be deposited in the Collection Account
pursuant to the immediately preceding paragraph shall instead be deposited by
the Master Servicer in the Holding Account to the extent such amounts are
payments of Monthly P&I due in one or more months subsequent to the end of the
Due Period during which such payments are received.
With respect to payments of Monthly P&I made by Obligors to the Master
Servicer's lock box, the Master Servicer shall direct the Person maintaining the
lock box to deposit the amount collected on or in respect of the Contracts to
the Collection Account.
In those cases where a Subservicer is servicing a Contract pursuant to
a Subservicing Agreement, the Master Servicer shall cause the Subservicer to
remit to the Master Servicer for deposit in the Collection Account, on a daily
basis, within two Business Days after receipt by the Subservicer, all proceeds
of Contracts and all Net Liquidation Proceeds and Net Insurance Proceeds
received by the Subservicer.
In order to facilitate the servicing of the Contracts by the Master
Servicer, the Master Servicer shall retain, subject to and only to the extent
permitted by the provisions of this Agreement, all collections on or in respect
of the Contracts prior to the time they are remitted or credited, in accordance
with such provisions, to the Collection Account or the Holding Account, as the
case may be. The Master Servicer acknowledges that the unremitted collections on
the Contracts are part of the Trust Estate and the Master Servicer agrees to act
as custodian and bailee of the Indenture Trustee, the Owner Trustee and the
Insurer in holding such monies and collections. The Master Servicer agrees, for
the benefit of the Indenture Trustee, the Owner Trustee, the Securityholders and
the Insurer, to act as such custodian and bailee, and to hold and deal with such
monies and such collections, as custodian and bailee for the Indenture Trustee,
the Owner Trustee and the Insurer, in accordance with the provisions of this
Agreement.
The Master Servicer shall retain all data (including, without
limitation, computerized records) relating directly to or maintained in
connection with the servicing of the Contracts at the address of the Master
Servicer set forth as Schedule B to this Agreement, at the office of any
Subservicer or, upon 15 days' notice to the Insurer, the Indenture Trustee and
the Owner Trustee, at such other place where the servicing offices of the Master
Servicer are located, and shall give the Indenture Trustee, the Owner Trustee
and the Insurer access to all data at all reasonable times. While a Servicer
Default shall be continuing, the Master Servicer shall, on demand of the
Indenture Trustee, the Owner Trustee or the Insurer, deliver or cause to be
delivered to the Indenture Trustee, the Owner Trustee or the Insurer, as the
case may be, all data (including,
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without limitation, computerized records and, to the extent transferable,
related operating software) necessary for the servicing of the Contracts and all
monies collected by it and required to be deposited in or credited to the
Collection Account or the Holding Account, as the case may be.
Section 4.02. Collection of Contract Payments. The Master Servicer shall
use its best efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due and shall use
its best efforts to cause each Obligor to make all payments in respect of his or
her Contract to the Master Servicer. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charges in connection
with delinquent payments on a Contract or prepayment charges and (ii) in order
to work out a default or an impending default due to the financial condition of
the Obligor, modify the payment schedule of a delinquent Contract (subject to
the next sentence) or extend the Maturity Date of a delinquent Contract by up to
90 days in the aggregate past the originally scheduled date of the last payment
on such Contract; provided that in the case of any extension granted pursuant to
clause (ii) the Master Servicer makes an Advance in respect of such extension
and in no event can the last payment on such Contract be extended beyond the
last day of the Due Period ending immediately prior to the Certificate Final
Distribution Date. The Master Servicer shall not extend the Maturity Date of a
Contract except as provided in clause (ii) of the preceding sentence and shall
not modify any Contracts except in accordance with the criteria and limitations
specified in Section 4.01.
Section 4.03. Realization upon Defaulted Contracts and Liquidated
Contracts. The Master Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 4.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual for prudent holders of motor vehicle
retail installment sales contracts and installment loans and as shall be in
compliance with all applicable laws, and, in connection with the repossession of
any Financed Vehicle or any Contract in default, may commence and prosecute any
proceedings in respect of such Contract in its own name or, if the Master
Servicer deems it necessary, in the name of the Owner Trustee or on behalf of
the Owner Trustee. The Master Servicer's obligations under this Section are
subject to the provision that, in the case of damage to a Financed Vehicle from
an uninsured cause, the Master Servicer shall not be required to expend its own
funds in repairing such Financed Vehicle unless it shall determine (i) that such
restoration will increase the proceeds of liquidation of the related Contract,
after reimbursement to itself for such expenses, and (ii) that such expenses
will be recoverable by it either as Liquidation Expenses or as expenses
recoverable under an applicable Insurance Policy. In the event that the Master
Servicer determines that, in its best judgment, further collection efforts by it
as to a Liquidated Contract will not result in the realization of additional Net
Liquidation Proceeds to the Trust, the Master Servicer may, in the name of the
Owner Trustee, and for the benefit of the Trust, sell the Liquidated Contract to
any party not affiliated with the Master Servicer free and clear of the rights
of the Trust. The Master Servicer shall be responsible for all other costs and
expenses incurred by it in connection with any action taken in respect of a
defaulted Contract; provided,
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however, that it shall be entitled to reimbursement of such costs and expenses
to the extent they constitute Liquidation Expenses or expenses recoverable under
an applicable Insurance Policy. All Net Liquidation Proceeds, Net Insurance
Proceeds and proceeds of the sale of Contracts hereunder shall be deposited
directly in or credited to the Collection Account (without deposit in any
intervening account) to the extent required by Section 5.02.
Section 4.04. Insurance. To the extent the Obligor fails to maintain a
comprehensive and collision insurance policy in an amount at least equal to the
lesser of (i) the actual cash value of the Financed Vehicle or (ii) the
principal amount due from the Obligor under the related Contract, the Master
Servicer shall obtain the LDI Policy in respect of such Financed Vehicle;
provided, however, that the Master Servicer shall not be required to maintain
such insurance in respect of any Financed Vehicle as to which the related
Contract has an unpaid principal balance of less than $4000 or the related
Contract has six or fewer months remaining before its Maturity Date.
Section 4.05. Maintenance of Security Interests in Financed Vehicles. The
Master Servicer shall take such steps as are necessary to maintain continuous
perfection and priority of the security interest created by each Contract in the
related Financed Vehicle, including but not limited to, obtaining the execution
by the Obligors and the recording, registering, filing, re-recording,
re-registering and refiling of all security agreements, financing statements,
continuation statements or other instruments as are necessary to maintain the
security interest granted by Obligors under the respective Contracts. The Owner
Trustee and the Indenture Trustee each hereby authorizes the Master Servicer to
take such steps as are necessary to re-perfect such security interest on behalf
of the Trust in the event of the relocation of a Financed Vehicle or for any
other reason.
Section 4.06. Covenants, Representations and Warranties of Master Servicer.
The Master Servicer hereby makes the following covenants, representations and
warranties on which (i) the Issuer is deemed to have relied in acquiring the
Contracts and (ii) the Insurer is deemed to have relied in issuing the Policies.
Such covenants, representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Contracts to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a) The Master Servicer covenants as to the Contracts:
(i) Lien in Force. The Financed Vehicle securing each Contract shall
not be released from the lien granted by the Contract in whole or in part,
except as contemplated herein.
(ii) Impairment. The Master Servicer shall not impair the rights of
the Noteholders and Certificateholders in the Contracts.
(iii) Amendments. The Master Servicer shall not amend the terms of any
Contract, except that extensions or modifications may be granted in
accordance with Section 4.02.
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(iv) Transfers. The Master Servicer may consent to the sale or
transfer by an Obligor of any Financed Vehicle if the original Obligor
under the related Contract remains liable under such Contract and the
transferee assumes all of the Obligor's obligations thereunder.
(b) The Master Servicer represents, warrants, and covenants:
(i) Organization and Good Standing. The Master Servicer (A) has been
duly organized and is validly existing as a corporation in good standing
under the laws of the State of California, (B) has qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where
the character of its properties or the nature of its activities makes such
qualification necessary, and (C) has full power, authority and legal right
to own its property, to carry on its business as presently conducted and to
enter into and perform its obligations under this Agreement
(ii) Power and Authority. The execution and delivery by the Master
Servicer of this Agreement are within the corporate power of the Master
Servicer and have been duly authorized by all necessary corporate action on
the part of the Master Servicer. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions herein contemplated,
nor compliance with the provisions hereof, will conflict with or result in
a breach of, or constitute a default under, any of the provisions of any
law, governmental rule, regulation, judgment, decree or order binding on
the Master Servicer or its properties or the articles of incorporation or
bylaws of the Master Servicer, or any of the provisions of any indenture,
mortgage, contract or other instrument to which the Master Servicer is a
party or by which it is bound or result in the creation or imposition of
any lien, charge or encumbrance upon any of its property pursuant to the
terms of any such indenture, mortgage, contract or other instrument.
(iii) Governmental Consents. The Master Servicer is not required to
obtain the consent of any other party or consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except (in each
case) such as have been obtained and are in full force and effect.
(iv) Binding Obligation. This Agreement has been duly executed and
delivered by the Master Servicer and, assuming the due authorization,
execution and delivery thereof by the Owner Trustee and the Indenture
Trustee, constitutes a legal, valid and binding instrument enforceable
against the Master Servicer in accordance with its terms (subject to
applicable bankruptcy and insolvency laws and other similar laws affecting
the enforcement of creditors' rights generally).
(v) No Proceedings. There are no actions, suits or proceedings pending
or, to the knowledge of the Master Servicer, threatened against or
affecting the Master Servicer, before or by any court, administrative
agency, arbitrator or governmental body with respect to any of the
transactions contemplated by this Agreement, or which will, if determined
adversely to the Master Servicer, materially and adversely affect it or its
business, assets, operations or condition, financial or otherwise, or
adversely affect the Master
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Servicer's ability to perform its obligations hereunder. The Master
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially
and adversely affect the transactions contemplated by the above-mentioned
documents.
(vi) Other Consents. The Master Servicer has obtained or made all
necessary consents, approvals, waivers and notifications of creditors,
lessors and other nongovernmental persons, in each case in connection with
the execution and delivery of, and the consummation of the transactions
contemplated by, this Agreement.
Section 4.07. Repurchase of Contracts upon Breach of Covenant. The Master
Servicer or the Owner Trustee shall inform the other party and the Indenture
Trustee and the Insurer promptly, in writing, upon the discovery of any breach
pursuant to Section 4.02, 4.05 or 4.06. Unless the breach shall have been cured
within 30 days following such discovery, the Master Servicer shall purchase any
Contract materially and adversely affected by such breach. In consideration of
the purchase of such Contract, the Master Servicer shall remit the Repurchase
Amount in the manner specified in Section 5.04. The sole remedy of the Issuer,
the Owner Trustee, the Indenture Trustee, the Certificateholders or the
Noteholders with respect to a breach pursuant to Section 4.02, 4.05 or 4.06
shall be to require the Master Servicer to purchase Contracts pursuant to this
Section; provided, however, that the Master Servicer shall indemnify the Owner
Trustee, the Indenture Trustee, the Insurer, the Issuer and the Securityholders
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third-party claims arising out of the
events or facts giving rise to such breach. The Owner Trustee shall have no duty
to conduct any affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Contract pursuant to this Section.
Section 4.08. Servicing Compensation. As compensation for the performance
of its obligations under this Agreement and subject to the terms of this
Section, the Master Servicer shall be entitled to receive on each Distribution
Date the Servicing Fee in respect of each Contract that was Outstanding at the
beginning of the Due Period ending immediately prior to such Distribution Date,
to the extent the related payment of Monthly P&I has been collected or advanced
pursuant to Section 5.04. As servicing compensation in addition to the Servicing
Fee, the Master Servicer shall be entitled (i) to retain all late payment
charges, extension fees and similar items paid in respect of Contracts, and (ii)
to receive, in respect of each Rule of 78's Contract that is prepaid in full
prior to its Maturity Date, the amount by which the outstanding principal
balance of such Contract exceeds the Scheduled Balance of such Contract at the
time of such prepayment; provided, however, that the Master Servicer agrees that
each amount payable to it pursuant to clause (ii) above shall be deposited in
the Spread Account and applied in accordance with Article Five and the Insurance
Agreement. The Master Servicer shall pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled to
reimbursement of such expenses except to the extent provided in Section 4.03.
Section 4.09. Reporting by the Master Servicer.
(a) On each Master Servicer Report Date, the Master Servicer shall transmit
to the Owner Trustee, the Indenture Trustee, each Rating Agency and the Insurer
a statement,
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substantially in the form of Exhibit F hereto (the "Distribution Date
Statement"), setting forth with respect to the next succeeding Distribution
Date:
(i) the Certificate Interest Distributable Amount and the Note
Interest Distributable Amount for such Distribution Date;
(ii) the Certificate Principal Distributable Amount and the Note
Principal Distributable Amount for such Distribution Date and the portion
thereof constituting the Accelerated Principal Distributable Amount;
(iii) the Net Collections, the Note Percentage and the Certificate
Percentage for such Distribution Date;
(iv) the amount otherwise distributable to each Class of Noteholders
and the Certificateholders that will be distributed to a different Class of
Noteholders on such Distribution Date;
(v) the amount to be on deposit in the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto and
withdrawals therefrom to be made in respect of such Distribution Date;
(vi) the Servicing Fee with respect to the related Due Period;
(vii) the amount of any Note Interest Carryover Shortfall, Note
Principal Carryover Shortfall, Certificate Interest Carryover Shortfall and
Certificate Principal Carryover Shortfall on such Distribution Date and the
change in such amounts from those with respect to the immediately preceding
Distribution Date;
(viii) the aggregate amount of Monthly P&I which was due on the
Contracts during the related Due Period and was delinquent as of the end of
the related Due Period (any such payment of Monthly P&I being presumed to
be delinquent to the extent that it was not deposited in or credited to the
Collection Account during such Due Period);
(ix) the amount set forth in clause (viii) above which is being
advanced concurrently with such Distribution Date Statement by the Master
Servicer pursuant to Section 5.04, the amount of any such Advance being
deposited in or credited to the Collection Account on such Master Servicer
Report Date;
(x) the aggregate amount of any Nonrecoverable Advances deducted by
the Master Servicer from amounts otherwise required to be deposited by the
Master Servicer in the Collection Account during the related Due Period;
(xi) the aggregate amount of Retained Yield for the related Due
Period;
(xii) the Aggregate Net Liquidation Losses for the related Due Period;
(xiii) the Delinquency Percentage and the Charge-Off Percentage for
the most recent Calculation Day;
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(xiv) the amount of Contracts which have had their APR or principal
amount modified pursuant to Section 4.01 and the percentage that amount
constitutes of the Original Principal Balance on a cumulative basis; in
addition the aggregate Scheduled Balance of Contracts so modified as a
percentage of the Pool Balance for the most recent Distribution Date;
(xv) the Certificate Deficiency Claim Amount, if any, for such
Distribution Date;
(xvi) the Certificate Policy Claim Amount, if any, for such
Distribution Date;
(xvii) the Note Deficiency Claim Amount, if any, for such Distribution
Date, separately setting forth the amount thereof payable in respect of
each Class of Notes;
(xviii) the Note Policy Claim Amount, if any, for such Distribution
Date, separately setting forth the amount thereof payable in respect of
each Class of Notes; and
(xix) if the data becomes available, the principal amount of Contracts
originated by WFS in respect of clauses (viii) and (xii) above.
Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Master Servicer stating that the computations reflected in
such statement were made in conformity with the requirements of this Agreement.
(b) On each Master Servicer Report Date, the Master Servicer shall deliver
to the Owner Trustee, the Indenture Trustee, each Rating Agency and the Insurer
a report, in respect of the immediately preceding Due Period, setting forth the
following:
(i) the aggregate amount, if any, paid by or due from it for the
purchase of Contracts which the Seller or the Master Servicer has become
obligated to purchase pursuant to Section 3.02 or 4.07 or the Seller has
elected to purchase pursuant to Section 9.01;
(ii) the net amount of funds which have been deposited in or credited
to the Collection Account or the Holding Account in respect of such Due
Period (including amounts, if any, collected during the immediately
preceding Due Period and deposited in the Holding Account pursuant to
Section 5.02) after giving effect to all permitted deductions therefrom
pursuant to Section 5.02;
(iii) with respect to each Contract that became a Liquidated Contract
during such Due Period, the following information:
(A) its Contract Number;
(B) the effective date as of which such Contract became a
Liquidated Contract;
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(C) its Monthly P&I and Scheduled Balance as of the immediately
preceding Distribution Date (or as of the Cut-Off Date in the case of
the first Distribution Date); and
(D) if less than 100% of the outstanding principal balance of and
accrued and unpaid interest was recovered on such Liquidated Contract,
the amount of the Net Liquidation Proceeds or Net Insurance Proceeds;
(iv) with respect to each Contract which was the subject of a Partial
Prepayment during such Due Period, the following information:
(A) its Contract Number;
(B) the date of such Partial Prepayment;
(C) its new Maturity Date;
(D) the total amount received with respect to such Partial
Prepayment; and
(E) its Scheduled Balance as of the prior Distribution Date (or
as of the Cut-Off Date in the case of the first Distribution Date) and
its Scheduled Balance for each Distribution Date having a Due Period
prior to the Due Period of its Maturity Date, computed on the basis
set forth under the definition of the term "Scheduled Balance";
(v) the Contract Numbers, Monthly P&I, Scheduled Balances and Maturity
Dates of all Contracts which became Defaulted Contracts during such Due
Period;
(vi) any other information relating to the Contracts reasonably
requested by the Owner Trustee, the Indenture Trustee, each Rating Agency
or the Insurer; and
(vii) the amount of Net Liquidation Proceeds and Net Insurance
Proceeds which have been deposited in or credited to the Collection Account
or the Holding Account in respect of the Due Period ending immediately
prior to such Master Servicer Report Date and the cumulative amount of Net
Liquidation Proceeds and Net Insurance Proceeds deposited in or credited to
the Collection Account or the Holding Account during the preceding Due
Periods.
Section 4.10. Annual Statement as to Compliance. The Master Servicer shall
deliver to the Owner Trustee, the Indenture Trustee, each Rating Agency and the
Insurer, on or before 90 days after the end of each fiscal year of the Master
Servicer, beginning with the fiscal year ended December 31, 1999, an Officers'
Certificate of the Master Servicer stating that (i) a review of the activities
of the Master Servicer during the preceding fiscal year (or since the Closing
Date in the case of the first such Officers' Certificate) and of its performance
under this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Master Servicer
has fulfilled all its obligations under this Agreement throughout such year and
that no default under this Agreement has occurred and is continuing,
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or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof. A copy of such certificate and the report referred to in Section 4.11
may be obtained by any Certificateholder, Certificate Owner, Noteholder or Note
Owner by a request in writing to the Owner Trustee addressed to the Owner
Trustee Corporate Trust Office. Upon the telephone request of the Owner Trustee,
the Indenture Trustee will promptly furnish the Owner Trustee a list of
Noteholders as of the date specified by the Owner Trustee.
Section 4.11. Annual Independent Certified Public Accountants' Report. On
or before 90 days after the end of the first fiscal year of the Master Servicer
which ends more than three months after the Closing Date and each fiscal year
thereafter, the Master Servicer at its expense shall cause a firm of
nationally-recognized independent certified public accountants (who may also
render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Owner Trustee, each Rating Agency and the Insurer to the
effect that (i) they have audited the balance sheet of the Master Servicer as of
the last day of said fiscal year and the related statements of operations,
retained earnings and cash flows for such fiscal year and have issued an opinion
thereon, specifying the date thereof, (ii) they have also audited certain
documents and the records relating to the servicing of the Contracts and the
distributions on the Notes and the Certificates hereunder, (iii) their audit as
described under clauses (i) and (ii) above was made in accordance with generally
accepted auditing standards and accordingly included such tests of the
accounting records and such other auditing procedures as they considered
necessary in the circumstances, and (iv) their audits described under clauses
(i) and (ii) above disclosed no exceptions which, in their opinion, were
material, relating to the servicing of such Contracts in accordance with this
Agreement and the making of distributions on the Notes and Certificates in
accordance with this Agreement, or, if any such exceptions were disclosed
thereby, setting forth such exceptions which, in their opinion, were material.
Section 4.12. Access to Certain Documentation and Information Regarding
Contracts. The Master Servicer shall provide to the Insurer, the Indenture
Trustee and the Securityholders access to the Contract Files in such cases where
the Certificateholders or Noteholders shall be required by applicable statutes
or regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the designated offices of the Master Servicer and each related Subservicer, if
any. Nothing in this Section shall affect the obligation of the Master Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors and the failure of the Master Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
Section 4.13. Fidelity Bond. The Master Servicer shall maintain a fidelity
bond in such form and amount as is customary for banks acting as custodian of
funds and documents in respect of mortgage loans or consumer contracts on behalf
of institutional investors.
Section 4.14. Indemnification; Third Party Claims. Subject to Section 8.02,
the Master Servicer agrees to indemnify and hold the Indenture Trustee, the
Owner Trustee and the Securityholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and any reasonable other costs, fees and expenses that the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders
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may sustain because of the failure of the Master Servicer to perform its duties
and service the Contracts in compliance with the terms of this Agreement. The
Master Servicer shall immediately notify the Indenture Trustee and the Owner
Trustee if a claim is made by a third party with respect to the Contracts,
assume, with the consent of the Indenture Trustee and the Owner Trustee, the
defense of any such claim and pay all expenses in connection therewith,
including counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against it or Indenture Trustee, the Owner Trustee,
the Noteholders or the Certificateholders.
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ARTICLE FIVE
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Trust Accounts.
(a) Prior to the Closing Date, the Master Servicer shall open, at a
depository institution (which may be the Indenture Trustee, the Bank or the
Master Servicer), the following accounts (the "Trust Accounts"):
(i) an account in the name of the Indenture Trustee (the "Collection
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Securityholders;
(ii) an account in the name of the Indenture Trustee (the "Holding
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Securityholders;
(iii) an account in the name of the Indenture Trustee (the "Spread
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Securityholders;
(iv) an account in the name of the Indenture Trustee (the "Note
Distribution Account") bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Noteholders; and
(v) an account in the name of the Owner Trustee (the "Certificate
Distribution Account") bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Certificateholders.
The Trust Accounts shall be Eligible Accounts and relate solely to the
Securities and to the Contracts and Eligible Investments. The Master Servicer
shall give the Indenture Trustee, the Owner Trustee and the Insurer at least
five Business Days' written notice of any change in the location of any Trust
Account and any related account identification information. All monies
(exclusive of the Retained Yield) deposited in or credited to, from time to
time, the Trust Accounts shall be part of the Trust Estate and all monies
deposited in or credited to, from time to time, the Collection Account, the
Spread Account, the Certificate Distribution Account and the Note Distribution
Account shall be invested by the Indenture Trustee in Eligible Investments
pursuant to Section 5.01(b). On the Business Day following each Distribution
Date, all amounts, if any, on deposit in or credited to the Holding Account
(excluding any installments of Monthly P&I that are due in one or more Due
Periods ending subsequent to the Distribution Date immediately succeeding such
Distribution Date) shall be transferred to the Collection Account.
(b) All funds in the Collection Account, the Spread Account, the Note
Distribution Account and the Certificate Distribution Account shall be invested
by the Indenture Trustee in Eligible Investments and/or Proprietary Funds.
Unless and until the RIC is no longer an Eligible Investment, all funds in such
Trust Accounts, in each case that are available for investment in
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Eligible Investments or in Proprietary Funds, shall be invested in the RIC or in
Proprietary Funds. If the RIC is no longer an Eligible Investment then, subject
to the limitations set forth herein, the Master Servicer may direct the
Indenture Trustee in writing to invest funds in the foregoing Trust Accounts in
Eligible Investments or Proprietary Funds other than the RIC; provided that in
the absence of such directions from the Master Servicer, the Insurer may so
direct the Indenture Trustee. All such investments shall be in the name of the
Indenture Trustee for the benefit of the Noteholders and the Certificateholders,
as applicable. All income or other gain from investment of monies deposited in
or credited to the Collection Account (including without limitation the RIC
Reinvestment Earnings) shall be deposited in or credited to the Collection
Account immediately upon receipt, and any loss resulting from such investment
shall be charged to the Collection Account. All income or other gain from
investment of monies deposited in or credited to the Spread Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Spread Account immediately upon receipt, and any loss resulting
from such investment shall be charged to the Spread Account. All income or other
gain from investment of monies deposited in or credited to the Note Distribution
Account (including without limitation the RIC Reinvestment Earnings) shall be
deposited in or credited to the Note Distribution Account immediately upon
receipt, and any loss resulting from such investment shall be charged to the
Note Distribution Account. All income or other gain from investment of monies
deposited in or credited to the Certificate Distribution Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Certificate Distribution Account immediately upon receipt, and
any loss resulting from such investment shall be charged to the Certificate
Distribution Account. The maximum permissible maturities of any investments of
funds in the Collection Account, the Spread Account, the Note Distribution
Account and the Certificate Distribution Account on any date shall not be later
than the fifth Business Day immediately preceding the Distribution Date next
succeeding the date of such investment; provided, however, that such funds may
be invested by the Indenture Trustee in Eligible Investments (other than the
RIC) that mature on the Business Day before the Distribution Date or in
Proprietary Funds for a period not to exceed one Business Day. No investment in
Eligible Investments may be sold prior to its maturity and all investments in
Proprietary Funds shall be for a period not to exceed one Business Day.
(c) Funds in the Holding Account shall not be invested.
(d) (i) The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts (exclusive of
Retained Yield, if any) and in all proceeds thereof (including all income
thereon) and all such funds, investments, proceeds and income shall be part of
the Trust Estate. The Trust Accounts, other than the Certificate Distribution
Account, shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders, as the case may
be. The Certificate Distribution Account shall be in the name of the Owner
Trustee for the benefit of the Certificateholders. If, at any time, any of the
Trust Accounts ceases to be an Eligible Account, the Indenture Trustee (or the
Master Servicer on its behalf) shall within ten Business Days (or such longer
period, not to exceed 30 calendar days, as to which each Rating Agency may
consent) establish a new Trust Account as an Eligible Account and shall transfer
any cash and/or any investments to such new Trust Account.
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(ii) With respect to the Trust Account Property, the Indenture Trustee
agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit accounts
shall be held solely in the Eligible Accounts, subject to the last
sentence of Section 5.01(d)(i); and each such Eligible Account shall
be subject to the exclusive custody and control of the Indenture
Trustee, and the Indenture Trustee shall have sole signature authority
with respect thereto;
(B) any Trust Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with
paragraph (i) of the definition of the term "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture Trustee
or a Financial Intermediary acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (ii) of
the definition of the term "Delivery" and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described in
such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article Eight of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (iii) of the definition of the term
"Delivery" and shall be maintained by the Indenture Trustee, pending
maturity or disposition, through continued registration of the
Indenture Trustee's (or its nominee's) ownership of such security.
(iii) The Master Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee to make withdrawals and payments
from the Trust Accounts for the purpose of permitting the Master Servicer
or the Owner Trustee to carry out its respective duties hereunder or
permitting the Indenture Trustee to carry out its duties under the
Indenture.
Section 5.02. Collections; Realization Upon Policies; Net Deposits.
(a) Subject to Section 5.03 and subsections (d) and (e) hereof, the Master
Servicer shall remit or credit all payments by the Obligors on the Contracts,
all payments on behalf of Obligors on the Contracts, and all Net Liquidation
Proceeds and Net Insurance Proceeds to the Collection Account (within two
Business Days as specified in Section 4.01); provided that the Master Servicer
shall retain from collection of late payments and Net Liquidation Proceeds or
Net Insurance Proceeds in respect of a Contract an amount equal to previously
unreimbursed Advances in respect of such Contract made pursuant to Section 5.04.
Amounts otherwise required to be deposited in or credited to the Collection
Account pursuant to the immediately preceding sentence shall instead be
deposited in or credited to the Holding Account to the extent
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that such amounts are installments of Monthly P&I which are due in a Due Period
for a Distribution Date subsequent to the Distribution Date immediately
succeeding the date of receipt.
(b) Notwithstanding anything in this Agreement to the contrary, the
Retained Yield will be collected by the Master Servicer and paid out on a
monthly basis to the Seller without ever becoming part of the Trust's assets.
(c) Not later than 12:00 p.m., New York City time, on the fifth Business
Day prior to each Distribution Date, based on the information set forth in the
related Distribution Date Statement to the extent that there are insufficient
funds to make the distributions required to be made to each Class of Notes and
the Certificates as described in Sections 5.05 and 5.06, the Master Servicer
shall deliver to the Indenture Trustee, with a copy to the Insurer, the Owner
Trustee and the Fiscal Agent, if any, by hand delivery, telex or facsimile
transmission, a written notice (a "Deficiency Notice") specifying the
Certificate Deficiency Claim Amount or the Note Deficiency Claim Amount, if any,
for such Distribution Date, separately identifying the amount of the applicable
Deficiency Claim Amount payable in respect of each Class of Notes and the
Certificates. Such Deficiency Notice shall direct the Indenture Trustee to remit
such Deficiency Claim Amount (to the extent of funds then on deposit in the
Spread Account) (i) with respect to any Certificate Deficiency Claim Amount, to
the Owner Trustee for deposit in the Certificate Distribution Account and (ii)
with respect to any Note Deficiency Claim Amount, to the Indenture Trustee for
deposit in the Note Distribution Account.
(d) Not later than 12:00 p.m., New York City time, on the fourth Business
Day prior to each Distribution Date, (i) the Owner Trustee shall make a claim
under the Certificate Policy for any Certificate Policy Claim Amount for such
Distribution Date and/or (ii) the Indenture Trustee shall make a claim under the
Note Policy for any Note Policy Claim Amount for such Distribution Date, in each
case by delivering to the Insurer and the Fiscal Agent, if any, with a copy to
the Master Servicer, by hand delivery, telex or facsimile transmission, a claim
for the related Certificate Policy Claim Amount or Note Policy Claim Amount, as
the case may be. In making any such claim, the Owner Trustee or the Indenture
Trustee, as the case may be, shall comply with all the terms and conditions of
the related Policy. The notice of such claim shall direct the Insurer to remit
such Certificate Policy Claim Amount or Note Policy Claim Amount, as the case
may be, to the Owner Trustee or the Indenture Trustee for deposit in the
Certificate Distribution Account or the Note Distribution Account, as the case
may be.
(e) So long as the Master Servicer is WFS, the Master Servicer shall have
the right, on a basis not more frequently than once per month (although deposits
shall be made into the Collection Account within two Business Days pursuant to
Section 4.01), to deduct from amounts received that are otherwise required to be
deposited in or credited to the Collection Account and, to the extent such
amounts are insufficient, to require that the Indenture Trustee withdraw and
deliver to it from the Collection Account, amounts due to be paid hereunder to
the Master Servicer or to the Seller after giving effect to application of the
payment priorities specified in this Article for the month (or other applicable
period), and to pay such amounts to itself as Master Servicer or to the Seller,
as the case may be. Notwithstanding the foregoing, the Master Servicer shall
maintain the records and accounts for such deposits and credits on a gross
basis.
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Section 5.03. Application of Collections. As of each Record Date, all
collections for the related Due Period shall be applied by the Master Servicer
as follows: with respect to each Contract (including a Defaulted Contract),
payments by or on behalf of an Obligor shall be applied first to late payment
and extension fees, second to interest accrued on the Contract, third to
principal due on the Contract and fourth to administrative charges, if any. Any
excess shall be applied to prepay the principal balance of the Contract.
Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts.
(a) If, as of the end of any Due Period, one or more payments of Monthly
P&I due under any Contract (other than a Liquidated Contract) Outstanding at the
end of such Due Period shall not have been received by the Master Servicer and
deposited in or credited to the Collection Account pursuant to Section 5.02(a),
the Master Servicer shall make, concurrently with the furnishing of the related
Distribution Date Statement to the Indenture Trustee and the Owner Trustee, the
Advance for such Due Period by depositing in or crediting to the Collection
Account (i) with respect to a Rule of 78's Contract, the amount of delinquent
Monthly P&I and (ii) with respect to a Simple Interest Contract, 30 days of
interest on the Outstanding Principal Balance of such Contract at a rate equal
to the sum of (A) the Pass-Through Rate and (B) the Servicing Fee Percent for
each month that the related Monthly P&I is delinquent at the end of such Due
Period. The Master Servicer shall account for such deposit or credit in
accordance with Section 4.01. The foregoing notwithstanding, the Master Servicer
shall not make an Advance in respect of a Contract if the Master Servicer shall
have determined that any such Advance, if made, would constitute a
Nonrecoverable Advance. Any such determination shall be evidenced by an
Officers' Certificate furnished to the Indenture Trustee, the Owner Trustee and
the Insurer setting forth the basis for such determination.
(b) If the Master Servicer determines that it has made a Nonrecoverable
Advance or Advances, the Master Servicer shall reimburse itself, without
interest, from unrelated installments of Monthly P&I or Prepayment proceeds to
the extent it shall, concurrently with the withholding of any such installment
or proceeds from deposit in or credit to the Collection Account as required by
Section 5.02, furnish to the Indenture Trustee, the Owner Trustee and the
Insurer a certificate of a Servicing Officer setting forth the basis for the
Master Servicer's determination, the amount of, and Contract with respect to
which, such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken.
(c) The Master Servicer or the Seller, as the case may be, shall remit or
credit to the Collection Account the aggregate Repurchase Amount with respect to
Repurchased Contracts on the Master Servicer Report Date next succeeding the
last day of the related cure period specified in Section 3.02 or 4.07, as the
case may be. In addition, the Master Servicer and the Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Repurchase Amount
with respect to Repurchased Contracts and the Master Servicer shall deposit
therein all amounts to be paid under Section 9.01.
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Section 5.05. Distributions.
(a) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09) to make the following deposits and distributions for receipt by
the Master Servicer or deposit in the applicable account by 11:00 a.m. (New York
time), to the extent of the Net Collections for such Distribution Date, in the
following order of priority:
(i) to the Master Servicer, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Due Periods;
(ii) to the Indenture Trustee and the Owner Trustee, any accrued and
unpaid Trustees' fees, in each case to the extent such fees have not been
previously paid by the Master Servicer;
(iii) to the Note Distribution Account, from Net Collections (after
giving effect to the reduction in Net Collections described in clauses (i)
and (ii) above), the Note Interest Distributable Amount;
(iv) to the Note Distribution Account, from Net Collections (after
giving effect to the reduction in Net Collections described in clauses (i)
through (iii) above), the Note Principal Distributable Amount, (which
amount includes, if such Distribution Date is a Note Final Distribution
Date, the remaining principal amount of the related Class of Notes) first
to the holders of the Class A-1 Notes until the principal amount of the
Class A-1 Notes has been reduced to zero, second to the holders of the
Class A-2 Notes until the principal amount of the Class A-2 Notes has been
reduced to zero, third to the holders of the Class A-3 Notes until the
principal amount of the Class A-3 Notes has been reduced to zero and fourth
to the holders of the Class A-3 Notes until the principal amount of the
Class A-3 Notes has been reduced to zero;
(v) to the Certificate Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) through (iv) above), the Certificate Interest Distributable
Amount;
(vi) to the Certificate Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) through (v) above), the Certificate Principal Distributable
Amount; (which amount includes, if such Distribution Date is the
Certificate Final Distribution Date, the Certificate Balance, as such
balance has been reduced by payments thereon in respect of such
Distribution Date); and
(vii) to the Insurer, from Net Collections (after giving effect to the
reduction in Net Collections described in clauses (i) through (vi) above),
any Unreimbursed Insurer Amounts.
(b) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Master Servicer Report Date pursuant to
Section 4.09), to distribute any excess amounts
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remaining from Net Collections after making the distributions described in
Section 5.05(a) ("Excess Amounts") to the Spread Account. On any Distribution
Date on which the amount on deposit in the Spread Account (after giving effect
to all deposits to, and withdrawals from, the Spread Account on such
Distribution Date) is greater than the Specified Spread Account Balance, the
Master Servicer shall instruct the Indenture Trustee to distribute an amount in
cash, first, to the Insurer, to the extent of any Unreimbursed Insurer Amounts,
second, to the Seller until the Seller has received an aggregate amount equal to
the Spread Account Initial Deposit and third, to the Seller and the Company, in
the proportions of 99% and 1%, respectively.
Notwithstanding that the Notes have been paid in full, the Indenture Trustee
shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
(c) To the extent that on any Distribution Date:
(i) the amount on deposit in the Note Distribution Account (after
giving effect to any deposits thereto on such Distribution Date) is less
than the Note Distributable Amount, Noteholders shall be entitled to
receive distributions in respect of such deficiency first, from amounts on
deposit in the Spread Account pursuant to a Deficiency Notice; second, if
such amounts are insufficient, from amounts otherwise payable to
Certificateholders in respect of the Certificate Distributable Amount and
third, if such amounts are still insufficient, from a claim made under the
Note Policy for the Note Policy Claim Amount pursuant to Section 5.02(d);
and
(ii) the amount on deposit in the Certificate Distribution Account
(after giving effect to any deposits thereto on such Distribution Date) is
less than the Certificate Distributable Amount, Certificateholders shall be
entitled to receive distributions in respect of such deficiency, first,
from amounts on deposit in the Spread Account, to the extent that such
amounts remain available after giving effect to the immediately preceding
paragraph, pursuant to a Deficiency Notice and second, if such amounts are
insufficient, from a claim made under the Certificate Policy for the
Certificate Policy Claim Amount pursuant to Section 5.02(d).
Section 5.06. Spread Account.
(a) On or prior to the Closing Date, the Owner Trustee, on behalf of the
Seller, shall deposit the Spread Account Initial Deposit into the Spread Account
from the net proceeds of the sale of the Notes and the Certificates. The Spread
Account will be held for the benefit of the Securityholders and the Insurer in
order to effectuate the subordination of the rights of the Securityholders to
the extent described above.
(b) On each Calculation Day or Distribution Date on which the amount on
deposit in the Spread Account (after giving effect to all deposits to, and
withdrawals from, the Spread Account on such Distribution Date) is greater than
the Specified Spread Account Balance, the Master Servicer shall instruct the
Indenture Trustee to distribute an amount in cash, first, to the Insurer, to the
extent of any Unreimbursed Insurer Amounts, second, to the Seller until the
Seller has received an amount equal to the Spread Account Initial Deposit and
third, to the Seller and the Company in the proportions of 99% and 1%,
respectively. Upon any such distribution to the
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Insurer, the Seller or the Company, Securityholders will have no further rights
in, or claims to, such amounts.
(c) Amounts held in the Spread Account shall be invested in the manner
specified in Section 5.01(b), and such investments shall be made in accordance
with written instructions from the Master Servicer; provided that, if the
Indenture Trustee does not receive any such written instructions prior to any
date on which an investment decision must be made, the Indenture Trustee shall
invest such amounts held in the Spread Account in Eligible Investments
consisting of commercial paper given the highest rating by each Rating Agency at
the time of such investment. All such investments shall be made in the name of
the Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.
(d) Upon termination of the Trust pursuant to Section 9.01, any amounts on
deposit in the Spread Account, after payments of amounts due to the
Securityholders or the Insurer (if there exists any Unreimbursed Insurer
Amounts), will be paid to the Seller.
Section 5.07. Statements to Securityholders.
(a) On each Distribution Date, (i) the Indenture Trustee shall include with
each distribution to each Noteholder of record as of the related Record Date,
and (ii) the Owner Trustee shall include with each distribution to each
Certificateholder of record as of the related Record Date, a statement, prepared
by the Master Servicer, based on the information in the Distribution Date
Statement furnished pursuant to Section 4.09, setting forth for such
Distribution Date the following information as of the related Record Date or
such Distribution Date, as the case may be:
(i) the amount of such distribution allocable to principal (stated
separately for each Class of Notes and the Certificates);
(ii) the amount of such distribution allocable to interest (stated
separately for each Class of Notes and the Certificates);
(iii) the Note Percentage and the Certificate Percentage as of the
close of business on the last day of such Due Period;
(iv) the Aggregate Scheduled Balance as of the close of business on
the last day of such Due Period;
(v) the amount of the Servicing Fee paid to the Master Servicer with
respect to the related Due Period;
(vi) the amount of any Certificate Interest Carryover Shortfall,
Certificate Principal Carryover Shortfall, Note Interest Carryover
Shortfall and Note Principal Carryover Shortfall on such Distribution Date
and the change in such amounts from those with respect to the immediately
preceding Distribution Date;
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(vii) the Note Pool Factor for each Class of Notes and the Certificate
Pool Factor as of such Distribution Date, after giving effect to payments
allocated to principal reported under clause (i) above; and
(viii) the amount on deposit in the Spread Account on such
Distribution Date, after giving effect to distributions made on such
Distribution Date, and the change in such balance from the immediately
preceding Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) or (v) above shall
be expressed as a dollar amount per $1,000.00 of original principal amount of a
Note or original Certificate Balance, as the case may be.
(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Owner
Trustee and the Indenture Trustee, as the case may be, shall mail to each
Person who at any time during such calendar year shall have been a Holder
of a Note or a Certificate, respectively, a statement or statements,
prepared by the Master Servicer, which in the aggregate contain the sum of
the amounts set forth in clauses (i), (ii), (iv) and (v) above for such
calendar year or, in the event such Person shall have been a Holder of a
Note or a Certificate during a portion of such calendar year, for the
applicable portion of such year, for the purposes of such Noteholder's or
Certificateholder's preparation of federal income tax returns. In addition,
the Master Servicer shall furnish to the Owner Trustee and the Indenture
Trustee for distribution to such Person at such time any other information
necessary under applicable law for the preparation of such income tax
returns.
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ARTICLE SIX
THE SELLER
Section 6.01. Corporate Existence. During the term of this Agreement, the
Seller will keep in full force and effect its existence, rights and franchises
as a corporation under the laws of the jurisdiction of its incorporation and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Basic Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Seller and its Affiliates will be
conducted on an arm's-length basis.
Section 6.02. Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee and the Master Servicer from and against any
taxes that may at any time be asserted against any such Person with respect to
the transactions contemplated herein and in the other Basic Documents, including
any sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Issuer, not including any
taxes asserted with respect to, and as of the date of, the sale of the Contracts
to the Issuer or the issuance and original sale of the Securities, or asserted
with respect to ownership of the Contracts, or federal or other income taxes
arising out of distributions on the Certificates or the Notes) and costs and
expenses in defending against the same.
The Seller shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee and the Securityholders from and against any
loss, liability or expense incurred by reason of the Seller's willful
misfeasance, bad faith or negligence (other than errors in judgment) in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee and the Indenture Trustee from and against all costs, expenses, losses,
claims, damages and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein and, in the case
of the Owner Trustee, in the Trust Agreement and, in the case of the Indenture
Trustee, in the Indenture, except to the extent that such cost, expense, loss,
claim, damage or liability, in the case of (i) the Owner Trustee, shall be due
to the willful misfeasance, bad faith or negligence of the Owner Trustee or
shall arise from the breach by the Owner Trustee of any of its representations
or warranties set forth in Section 7.03 of the Trust Agreement, or (ii) the
Indenture Trustee, shall be due to the willful misfeasance, bad faith or
negligence of the Indenture Trustee.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are
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made thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
Section 6.03. Merger or Consolidation of, or Assumption of the Obligations
of, Seller; Certain Limitations.
(a) The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Insurer, the Owner Trustee and the Indenture Trustee an
agreement in form and substance reasonably satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer, which contains an assumption by such
successor entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Seller under this
Agreement. The Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section to each Rating Agency and will deliver to
the Insurer, the Owner Trustee and the Indenture Trustee a letter from each
Rating Agency to the effect that such merger, consolidation or succession will
not result in a qualification, downgrading or withdrawal of its then-current
ratings of each Class of Notes or the Certificates. The Seller and WFS shall
maintain separate corporate offices.
(b) (i) Subject to paragraph (ii) below, the purpose of the Seller shall be
to engage in any lawful activity for which a corporation may be organized under
the General Corporation Law of California and which is permitted for operating
subsidiaries of federally chartered savings associations other than the banking
business, the trust company business or the practice of a profession permitted
to be incorporated by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the actual business
activities of the Seller shall be limited to those activities permitted an
operating subsidiary of a federally chartered savings association pursuant to 12
CFR Section 545.81 including the following purposes, and activities incident to
and necessary or convenient to accomplish the following purposes: (A) to
acquire, own, hold, sell, transfer, assign, pledge, finance, refinance and
otherwise deal with, retail installment sales contracts and installment loans
secured by automobiles and light duty trucks (the "Vehicle Receivables"); (B) to
authorize, issue, sell and deliver one or more series of obligations, consisting
of one or more classes of notes, certificates or other securities (the "Offered
Securities") that are collateralized by or evidence an interest in Vehicle
Receivables and are rated in the highest available category by at least one
nationally recognized statistical rating agency; and (C) to negotiate,
authorize, execute, deliver and assume the obligations of any agreement relating
to the activities set forth in clauses (A) and (B) above, including but not
limited to any pooling and servicing agreement, indenture, reimbursement
agreement, credit support agreement, receivables purchase agreement or
underwriting agreement or to engage in any lawful activity which is incidental
to the activities contemplated by any such agreement. So long as any outstanding
debt of the Seller or Offered Securities are rated by any nationally recognized
statistical rating organization, the Seller shall not issue notes or otherwise
incur debt unless (I) the Seller has made a written request to the related
nationally recognized statistical rating organization to issue notes or incur
borrowings which notes or borrowings are rated by the
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related nationally recognized statistical rating organization the same as or
higher than the rating afforded such debt or securities, or (II) such notes or
borrowings (X) are fully subordinated (and which shall provide for payment only
after payment in respect of all outstanding rated debt and/or Offered
Securities) or are nonrecourse against any assets of the Seller other than the
assets pledged to secure such notes or borrowings, (Y) do not constitute a claim
against the Seller in the event such assets are insufficient to pay such notes
or borrowings, and (Z) where such notes or borrowings are secured by the rated
debt or Offered Certificates, are fully subordinated (and which shall provide
for payment only after payment in respect of all outstanding rated debt and/or
Offered Securities) to such rated debt or Offered Securities.
(c) Notwithstanding any other provision of this Section and any provision
of law, the Seller shall not do any of the following:
(i) engage in any business or activity other than as set forth in
clause (b) above;
(ii) without the affirmative vote of a majority of the members of the
Board of Directors of the Seller (which must include the affirmative vote
of at least two duly appointed Independent directors) (A) dissolve or
liquidate, in whole or in part, or institute proceedings to be adjudicated
bankrupt or insolvent, (B) consent to the institution of bankruptcy or
insolvency proceedings against it, (C) file a petition seeking or consent
to reorganization or relief under any applicable federal or state law
relating to bankruptcy, (D) consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or other similar official) of
the corporation or a substantial part of its property, (E) make a general
assignment for the benefit of creditors, (F) admit in writing its inability
to pay its debts generally as they become due, or (G) take any corporate
action in furtherance of the actions set forth in clauses (A) through (F)
above; provided, however, that no director may be required by any
shareholder of the Seller to consent to the institution of bankruptcy or
insolvency proceedings against the Seller so long as it is solvent; or
(iii) merge or consolidate with any other corporation, company or
entity or sell all or substantially all of its assets or acquire all or
substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity (except for the
acquisition of Vehicle Receivables and the sale of Vehicle Receivables to
one or more trusts in accordance with the terms of clause (b)(ii) above,
which shall not be otherwise restricted by this Section 6.03(c)).
Section 6.04. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on any document of any kind, prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Seller and any
director or officer or employee or agent of the Seller shall be reimbursed by
the Owner Trustee or the Indenture Trustee, as the case may be, for any
contractual damages, liability or expense incurred by reason of the Owner
Trustee's or the Indenture Trustee's willful misfeasance, bad faith or
negligence (except for errors in judgment) in the performance of their
respective duties hereunder, or by reason of reckless disregard of their
respective obligations and duties hereunder. The Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under
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this Agreement, and that in its opinion may involve it in any expense or
liability. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement.
Section 6.05. Seller Not to Resign. Subject to the provisions of Section
6.03, the Seller shall not resign from the obligations and duties hereby imposed
on it as Seller hereunder.
Section 6.06. Seller May Own Securities. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not the Seller or
an Affiliate thereof, except as expressly provided herein or in any Basic
Document. Securities so owned by or pledged to the Seller or such Affiliate
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority or distinction as among all of the Notes
or Certificates, as the case may be.
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ARTICLE SEVEN
THE MASTER SERVICER
Section 7.01. Liability of Master Servicer; Indemnities. Subject to Section
8.02, the Master Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Master Servicer under
this Agreement. Such obligations shall include the following:
(a) The Master Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Securityholders and
the Insurer from and against any and all costs, expenses, losses, damages,
claims and liabilities, arising out of or resulting from the use, ownership
or operation by the Master Servicer, any Subservicer or any of their
respective Affiliates of a Financed Vehicle.
(b) The Master Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee and the Insurer from and
against any taxes that may at any time be asserted against the Owner
Trustee, the Indenture Trustee or the Issuer with respect to the
transactions contemplated herein, including, without limitation, any sales,
gross receipts, general corporation, tangible personal property, privilege
or license taxes (but not including any taxes asserted with respect to, and
as of the date of, the sale of the Contracts to the Issuer or the issuance
and original sale of the Securities, or asserted with respect to ownership
of the Contracts, or federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending
against the same.
(c) The Master Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer and the
Securityholders from and against any and all costs, expenses, losses,
claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance or bad faith of the
Master Servicer in the performance of its duties under this Agreement or by
reason of reckless disregard of its obligations and duties under this
Agreement.
(d) The Master Servicer shall indemnify, defend and hold harmless the
Owner Trustee, the Indenture Trustee and the Insurer from and against any
and all costs, expenses, losses, claims, damages and liabilities arising
out of or incurred in connection with the acceptance or performance of the
trusts and duties herein contained, except to the extent that such cost,
expense, loss, claim, damage or liability (i) shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Owner Trustee or the Indenture Trustee, as the case may be; (ii) relates to
any tax other than the taxes with respect to which either the Seller or
Master Servicer shall be required to indemnify the Owner Trustee and the
Indenture Trustee; (iii) shall arise from the Owner Trustee's or the
Indenture Trustee's breach of any of their respective representations or
warranties set forth herein, in the Trust Agreement or in the Indenture; or
(iv) shall be one as to which the Seller is required to indemnify the Owner
Trustee or the Indenture Trustee, as the case may be.
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Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement and shall include, without limitation, reasonable fees and expenses of
counsel and expenses of litigation. If the Master Servicer shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Master Servicer, without
interest.
Section 7.02. Corporate Existence; Status as Master Servicer; Merger. The
Master Servicer shall not consolidate with or merge into any other corporation
or convey, transfer or lease all or substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Master Servicer has merged or the Person which acquires by
conveyance, transfer or lease substantially all the assets of the Master
Servicer as an entirety can lawfully perform the obligations of the Master
Servicer hereunder and executes and delivers to the Indenture Trustee and the
Owner Trustee an agreement in form and substance reasonably satisfactory to the
Indenture Trustee, the Owner Trustee and the Insurer, which contains an
assumption by such successor entity of the due and punctual performance or
observance of each covenant and condition to be performed or observed by the
Master Servicer under this Agreement. Notice shall be sent to each Rating Agency
by the Master Servicer of any consolidation, merger or succession pursuant to
this Section.
Section 7.03. Performance of Obligations.
(a) The Master Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Master Servicer shall not take any action, or permit any action to
be taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents or under any other instrument
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
Section 7.04. Master Servicer Not to Resign; Assignment.
(a) The Master Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Master Servicer of its duties hereunder would cause it to be in violation of
such legal requirements in a manner which would result in a material adverse
effect on the Master Servicer or its financial condition, said determination to
be evidenced by a resolution of its Board of Directors to such effect
accompanied by an Opinion of Counsel, satisfactory to the Owner Trustee and the
Indenture Trustee, to such effect. No such resignation shall become effective
unless and until (i) a new servicer acceptable to the Owner Trustee, the
Indenture Trustee and the Insurer is willing to service the Contracts and enters
into a servicing agreement with the Trust and the Insurer in form and substance
substantially similar to this Agreement and satisfactory to the Owner Trustee,
the Indenture Trustee and the Insurer and (ii) each Rating Agency confirms that
the selection of such new servicer will not result in the qualification,
reduction or withdrawal of its then-current rating of each Class of
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Notes and the Certificates assigned by such Rating Agency. No such resignation
shall affect the obligation of the Master Servicer to repurchase Contracts
pursuant to Section 4.07.
(b) Except as specifically permitted in this Agreement, the Master Servicer
may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that (i) the Master Servicer may assign this
Agreement in connection with a consolidation, merger, conveyance, transfer or
lease made in compliance with Section 7.02.
(c) Except as provided in Sections 7.04(a) and (b), the duties and
obligations of the Master Servicer under this Agreement shall continue until
this Agreement shall have been terminated as provided in Section 9.01 or the
Trust shall have been terminated as provided by the terms of the Trust
Agreement, and shall survive the exercise by the Owner Trustee, the Indenture
Trustee or the Insurer of any right or remedy under this Agreement, or the
enforcement by the Owner Trustee, the Indenture Trustee, any Certificateholder
or Noteholder, or the Insurer of any provision of the Notes, the Certificates,
the Insurance Agreement or this Agreement.
(d) The resignation of the Master Servicer in accordance with this Section
shall not affect the rights of the Seller hereunder. If the Master Servicer
resigns pursuant to this Section, its appointment as custodian can be terminated
pursuant to Section 3.07.
Section 7.05. Limitation on Liability of Master Servicer and Others.
(a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Issuer, the Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence (except errors in judgment) in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement. The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any person respecting any matters
arising under this Agreement.
(b) The Master Servicer and any director or officer or employee or agent of
the Master Servicer shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of such Trustee's willful misfeasance, bad faith or
negligence (except errors in judgment) in the performance of such Trustee's
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
Except as provided in this Agreement, the Master Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Master Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and
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the other Basic Documents and the rights and duties of the parties to this
Agreement and the other Basic Documents and the interests of the Securityholders
under the Basic Documents.
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ARTICLE EIGHT
DEFAULT
Section 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) A claim being made under either the Note Policy or the Certificate
Policy;
(b) Any failure by the Master Servicer or the Issuer to deposit or
credit, or to deliver to the Indenture Trustee for deposit, in any of the
Trust Accounts any amount required hereunder to be as deposited, credited
or delivered or to direct the Indenture Trustee to make any required
distributions therefrom, that shall continue unremedied for a period of
three Business Days after written notice of such failure is received from
the Owner Trustee, the Indenture Trustee or the Insurer or after discovery
of such failure by an officer of the Master Servicer;
(c) Any failure by the Master Servicer to deliver to the Insurer, the
Indenture Trustee or the Owner Trustee a report in accordance with Section
4.09 and/or Section 4.10 by the fourth Business Day prior to the
Distribution Date with respect to which such report is due, or the Master
Servicer shall have defaulted in the due observance of any provision of
Section 7.02 (other than failure to enter into an assumption agreement
under Section 7.02, which is a Servicer Default only if such failure
continues for ten Business Days);
(d) Failure on the part of the Seller, the Issuer or the Master
Servicer duly to observe or to perform in any material respect any other
covenants or agreements of the Master Servicer or the Seller set forth in
this Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of the Insurer, the Owner
Trustee, the Indenture Trustee, the Certificateholders or Noteholders and
(ii) continue unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given (A) to the Master Servicer or the Seller (as the case may
be) by the Insurer, the Owner Trustee or the Indenture Trustee or (B) to
the Master Servicer or the Seller (as the case may be), and to the Owner
Trustee and the Indenture Trustee by the Holders of Notes evidencing not
less than 25% of the Outstanding Amount of the Notes or, if the Notes have
been paid in full, by Certificateholders evidencing not less than 25% of
the Certificate Balance, or, so long as no default under either Policy has
occurred and is continuing and no insolvency of the Insurer has occurred,
by the Insurer;
(e) The occurrence of an Insolvency Event with respect to the Seller,
the Issuer or the Master Servicer; or
(f) Any representation, warranty or statement of the Master Servicer,
the Issuer or the Seller made in this Agreement or any certificate, report
or other writing delivered pursuant hereto shall prove to be incorrect in
any material respect as of the time when the same shall have been made
(excluding, however, any representation or warranty
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to which Section 3.01 or 4.06 shall be applicable so long as the Master
Servicer or the Seller shall be in compliance with Section 3.02 or 4.07, as
the case may be), and the incorrectness of such representation, warranty or
statement has a material adverse effect on the Noteholders or the
Certificateholders and, within 30 days after written notice thereof shall
have been given to the Master Servicer or the Seller by the Indenture
Trustee or the Owner Trustee or by the Holders of Notes evidencing not less
than 25% of the Outstanding Amount of the Notes, or Certificateholders
evidencing not less than 25% of the Certificate Balance or, so long as no
default has occurred under either Policy and is continuing and no Insurer
Insolvency has occurred, by the Insurer, the circumstance or condition in
respect of which such representation, warranty or statement was incorrect
shall not have been eliminated or otherwise cured;
then, and in each and every case, so long as such Servicer Default shall not
have been remedied and subject to the limitations set forth in Section 6.07 of
the Insurance Agreement, either the Indenture Trustee, the Insurer, the Holders
of Notes evidencing not less than 25% of the Outstanding Amount of the Notes
(or, if the Notes have been paid in full and the Indenture has been discharged
in accordance with its terms, by the Owner Trustee or by Certificateholders
evidencing not less than 25% of the Certificate Balance), by notice then given
in writing to the Master Servicer (and to the Insurer, the Indenture Trustee and
the Owner Trustee if given by the Noteholders or the Certificateholders) may
terminate all the rights and obligations of the Master Servicer under this
Agreement. Upon such termination, termination of the Master Servicer as
custodian can be made pursuant to Section 3.07. On or after the receipt by the
Master Servicer of such written notice, all authority and power of the Master
Servicer under this Agreement, whether with respect to the Notes, the
Certificates, the Contracts or otherwise, shall, without further action, pass to
and be vested in the Indenture Trustee or such successor Master Servicer as may
be appointed under Section 8.02; and, without limitation, the Indenture Trustee
and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Master Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of the Contracts and related documents, or otherwise. The Master
Servicer shall cooperate with the Indenture Trustee and the Owner Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Master Servicer under this Agreement, including the transfer to the Indenture
Trustee for administration by it of all cash amounts that shall at the time be
held by the predecessor Master Servicer for deposit, or shall thereafter be
received by it with respect to any Contract.
Section 8.02. Indenture Trustee to Act; Appointment of Successor. Upon the
Master Servicer's receipt of notice of termination pursuant to Section 8.01 or
resignation pursuant to Section 7.04, the Indenture Trustee shall be the
successor to the Master Servicer in its capacity as servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions of this Agreement, except that the Indenture Trustee shall not be
obligated to purchase Contracts pursuant to Section 4.07 unless the obligation
to repurchase arose after the date of the notice of termination given to the
Master Servicer pursuant to Section 8.01 or be subject to any obligation of the
Master Servicer to indemnify or hold harmless any Person as set forth in this
Agreement arising from the acts or omissions of the previous Master Servicer. As
compensation therefor,
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the Indenture Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Master Servicer would have
been entitled to under this Agreement if no such notice of termination shall
have been given. If, however, a bankruptcy trustee or similar official has been
appointed for the Master Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to prevent
the Indenture Trustee, Insurer or the Noteholders (or Certificateholders) from
effecting a transfer of servicing. Notwithstanding the above, the Indenture
Trustee may, if it shall be unwilling to act, or shall, if it shall be legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established financial institution, having a net worth of not less
than $50,000,000 and whose regular business shall include the servicing of motor
vehicle retail installment sales contracts, as the successor to the Master
Servicer under this Agreement. Pending appointment of any such successor Master
Servicer, the Indenture Trustee shall act in such capacity as provided above. In
connection with such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on Contracts
it and such successor shall agree; provided, however, that no such compensation
shall be in excess of that permitted the Master Servicer under this Agreement
without the consent of the Insurer. The Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Section 8.03. Repayment of Advances. If the identity of the Master Servicer
shall change, the predecessor Master Servicer shall be entitled to receive
reimbursement for outstanding Advances pursuant to Section 5.04 with respect to
all Advances made by the predecessor Master Servicer.
Section 8.04. Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Master Servicer pursuant
to this Article, the Owner Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register, and the Indenture Trustee shall give prompt written notice thereof to
Noteholders at their respective addresses appearing in the Note Register and to
each Rating Agency.
Section 8.05. Waiver of Past Defaults. The Holders of Notes evidencing not
less than 51% of the Outstanding Amount of the Notes, or, if all the Notes have
been paid in full and the Indenture has been discharged in accordance with its
terms, Certificateholders evidencing not less than 51% of the Certificate
Balance (in the case of any default which does not adversely affect the
Indenture Trustee or the Noteholders) may, on behalf of all Securityholders,
with the consent of the Insurer, waive in writing any default by the Master
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required deposits to or payments from any of the
Trust Accounts in accordance with this Agreement or in respect of a covenant or
provisions hereof which cannot be modified without the consent of each
Securityholder. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereto.
Section 8.06. Insurer Direction of Insolvency Proceedings. Upon receipt of
actual knowledge thereof by a Responsible Officer, the Indenture Trustee shall
promptly notify the
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Insurer of (i) the commencement of any of the events or proceedings
(individually, an "Insolvency Proceeding") described in the definition of the
term "Insolvency Event" or any such event or proceeding applicable to an Obligor
under a Contract and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, a Contract
or any Notes or Certificates. Each Noteholder and Note Owner, by its purchase of
Notes or a beneficial interest therein, each Certificateholder and Certificate
Owner, by its purchase of Certificates or a beneficial interest therein, the
Owner Trustee and the Indenture Trustee hereby agree that, so long as neither a
default under the Policies nor an Insurer Insolvency has occurred and is
continuing, the Insurer may at any time during the continuation of an Insolvency
Proceeding direct all matters relating to such Insolvency Proceeding, including,
without limitation, (i) all matters relating to any Preference Claim, (ii) the
direction of any appeal of any order relating to any Preference Claim and (iii)
the posting of any surety, supersedes or performance bond pending any such
appeal. The Insurer shall be subrogated to the rights of the Indenture Trustee,
the Owner Trustee and each Securityholder in the conduct of any Insolvency
Proceeding, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Insolvency Proceeding. In addition, for so long as the Insurer
guarantees amounts owing under the RIC and has not defaulted in the making of
any payment required to be made by it pursuant to such guaranty, the Insurer
shall have the right to initiate and control a proceeding against the obligor
under the RIC but only to the extent such proceeding relates to the amounts so
guaranteed and no settlement of any other proceeding or claim that would
adversely affect the Insurer's rights to recover such amounts shall be effected
without the prior written consent of the Insurer.
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ARTICLE NINE
TERMINATION
Section 9.01. Optional Purchase of All Contracts.
(a) On each Distribution Date as of which the Aggregate Scheduled Balance
is less than 5% of the Cut-Off Date Aggregate Scheduled Balance, the Seller
shall have the option to purchase the remaining Contracts from the Trust. Notice
of the exercise of such option shall be given by the Seller to the Owner
Trustee, the Indenture Trustee and the Insurer not later than the 25th day of
the month immediately preceding the month of such Distribution Date. To exercise
such option, the Seller shall pay to the Indenture Trustee for the benefit of
the Securityholders, by deposit in the Collection Account on the Business Day
immediately preceding the related Distribution Date, the aggregate Repurchase
Amount of all Contracts that were Outstanding at the beginning of the Due Period
ending immediately prior to such Distribution Date, and shall succeed to all
interests in and to the Trust. Such purchase shall be deemed to have occurred on
the last day of such Due Period. Notwithstanding the foregoing, the Seller shall
not be permitted to exercise such option unless the amount to be deposited in
the Collection Account pursuant to the preceding sentence is greater than or
equal to the sum of the outstanding principal amount of the Notes and the
Certificate Balance and all accrued but unpaid interest (including any overdue
interest) thereon. In addition, if the Master Servicer or the Seller has
outstanding senior debt and such debt is not rated "investment grade" by Moody's
at the time of exercising the option pursuant to this Section, then the Master
Servicer or the Seller shall deliver to the Owner Trustee, the Indenture Trustee
and Moody's, an Opinion of Counsel to the effect that such optional purchase is
not a fraudulent conveyance.
(b) Upon any sale of the assets of the Trust pursuant to Section 5.02(b) of
the Indenture, the Master Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Master
Servicer shall instruct the Indenture Trustee to make the following deposits
(after the application on such Distribution Date of Net Collections and funds on
deposit in the Spread Account pursuant to Sections 5.05 and 5.06) from the
Insolvency Proceeds and any funds remaining on deposit in the Spread Account
(including the proceeds of any sale of investments therein as described in the
following sentence):
(i) to the Note Distribution Account, any portion of the Note Interest
Distributable Amount not otherwise deposited into the Note Distribution
Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding principal
amount of the Notes (after giving effect to the reduction in the
outstanding principal amount of the Notes to result from the deposits made
in the Note Distribution Account on such Distribution Date and on prior
Distribution Dates);
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(iii) to the Certificate Distribution Account, any portion of the
Certificate Interest Distributable Amount not otherwise deposited into the
Certificate Distribution Account on such Distribution Date; and
(iv) to the Certificate Distribution Account, the Certificate Balance
(after giving effect to the reduction in the Certificate Balance to result
from the deposits made in the Certificate Distribution Account on such
Distribution Date).
(c) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Master Servicer to the Owner
Trustee, the Insurer and the Indenture Trustee as soon as practicable after the
Master Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
Section 9.02. Transfer to the Insurer. If (i) there is one or more
Outstanding Contracts at the end of the Due Period ending immediately prior to
the Certificate Final Distribution Date and (ii) an amount sufficient to pay the
Certificate Distributable Amount on the Certificate Final Distribution Date has
been deposited with the Indenture Trustee by the Insurer for the benefit of the
Certificateholders, then on the Certificate Final Distribution Date the
Certificates shall be deemed to be transferred by the Certificateholders to the
Insurer or its designee as purchaser thereof at the opening of business on the
Certificate Final Distribution Date and the Owner Trustee, on behalf of the
Trust, shall execute, and the Owner Trustee shall authenticate and deliver to
the Insurer or its designee, in the name of the Insurer or its designee, as the
case may be, a new Certificate evidencing the entire Certificate Balance. Such
new Certificate shall have the same terms as the Certificates deemed transferred
by the Certificateholders. No service charge shall be made for the issuance of
such Certificate to the Insurer or its designee, but the Owner Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge imposed in connection therewith. Such transfer shall not diminish or
restrict the Insurer's rights hereunder or under the Insurance Agreement.
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ARTICLE TEN
MISCELLANEOUS
Section 10.01. Amendment.
(a) This Agreement may be amended by the Seller, the Master Servicer and
the Owner Trustee on behalf of the Issuer, collectively, without the consent of
any Securityholders, (i) to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to add any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement, (ii) to add or provide any credit enhancement for any Class of Notes
or the Certificates and (iii) to change any provision applicable for determining
the Specified Spread Account Balance or the manner in which the Spread Account
is funded (in each case with the approval of the Insurer); provided, however,
that any such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Securityholder and provided,
further, that in connection with any amendment pursuant to clause (iii) above,
the Master Servicer shall deliver to the Owner Trustee, the Indenture Trustee
and the Insurer a letter from Standard & Poor's to the effect that such
amendment will not cause its then-current rating on any Class of Notes or the
Certificates to be qualified, reduced or withdrawn, without giving any
consideration to the effect of the guaranty under either Policy of payments
owing to Noteholders or to Certificateholders, and the Master Servicer shall
provide Moody's notice of such amendment; and provided, further, that this
Agreement may not be amended to alter the rights or obligations of the Indenture
Trustee without the prior consent of the Indenture Trustee.
(b) This Agreement may also be amended from time to time by the Seller, the
Master Servicer and the Owner Trustee on behalf of the Issuer, with the consent
of the Holders of Notes evidencing not less than 51% of the Outstanding Amount
of the Notes, and the consent of Certificateholders evidencing not less than 51%
of the Certificate Balance, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall increase or
reduce in any manner the amount of, or accelerate or delay the timing of (i)(a)
collections of payments on the Contracts or distributions that shall be required
to be made on any Note or Certificate or any Interest Rate or the Pass-Through
Rate, (b) except as otherwise provided in Section 10.01(a), the Specified Spread
Account Balance, or the manner in which the Spread Account is funded or (ii)
reduce the aforesaid percentage of the Outstanding Amount of the Notes and the
Certificate Balance, the Holders of which are required to consent to any such
amendment, without the consent of the Insurer and the Holders of all Notes and
Certificates of the relevant Class then outstanding.
(c) Prior to the execution of any such amendment or consent, the Indenture
Trustee shall furnish written notification of the substance of such amendment or
consent, as prepared by the Seller, the Master Servicer and the Owner Trustee on
behalf of the Issuer, at the expense of the such party, together with a copy
thereof, to each Rating Agency and the Insurer.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish the
written notification of the
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substance of the amendment or consent described in paragraph (c) above, at the
expense of the Seller, the Master Servicer or the Owner Trustee on behalf of the
Issuer, as the case may be, to each Certificateholder and Noteholder,
respectively. It shall not be necessary for the consent of Noteholders and
Certificateholders pursuant to Section 10.01(b) to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization by Noteholders and Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the Owner
Trustee or the Indenture Trustee may prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
Section 10.02. Protection of Title to Trust.
(a) The Master Servicer shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer, the Securityholders, the Indenture
Trustee, the Owner Trustee and the Insurer in the Contracts and in the proceeds
thereof. The Master Servicer shall deliver (or cause to be delivered) to the
Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the WFS, the Seller nor the Master Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance with
Section 10.02(a) seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Insurer, the Owner Trustee and the
Indenture Trustee at least 60 days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) WFS, the Seller and the Master Servicer shall give the Insurer, the
Owner Trustee and the Indenture Trustee at least 60 days' prior written notice
of any relocation of the principal executive office of WFS or the Seller and the
Master Servicer or the Subservicers (in the case of notice provided by the
Master Servicer) if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and shall
promptly file any such amendment or new financing statement. The Master Servicer
shall at all times maintain each office from which it shall service Contracts,
and its principal executive office, within the United States.
(d) The Master Servicer shall maintain or cause to be maintained accounts
and records as to each Contract accurately and in sufficient detail to permit
(i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries
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on (or with respect to) each Contract and the amounts from time to time
deposited in or credited to the Collection Account and the Holding Account in
respect of such Contract.
(e) The Master Servicer shall maintain or cause to be maintained its
computer systems and those of Subservicers so that, from and after the time of
sale under this Agreement of the Contracts, the Master Servicer's and
Subservicer's master computer records (including any backup archives) that shall
refer to a Contract indicate clearly the interest of the Issuer and the
Indenture Trustee in such Contract and that such Contract is owned by the Issuer
and has been pledged to the Indenture Trustee. Indication of the Issuer's
ownership of and the Indenture Trustee's interest in a Contract shall be deleted
from or modified on the Master Servicer's computer systems when, and only when,
the related Contract shall have been paid in full or repurchased or shall have
become a Liquidated Contract.
(f) If at any time the Seller, the Master Servicer or a Subservicer shall
propose to sell, grant a security interest in, or otherwise transfer any
interest in automotive retail installment sales contracts to any prospective
purchaser, lender or other transferee, the Master Servicer shall give or cause
to be given to such prospective purchaser, lender or other transferee computer
tapes, records or print-outs (including any restored from back-up archives)
that, if they shall refer in any manner whatsoever to any Contract, shall
indicate clearly that such Contract has been sold and is owned by the Issuer and
has been pledged to the Indenture Trustee.
(g) The Master Servicer shall permit the Owner Trustee, the Indenture
Trustee and the Insurer and its agents, at any time during normal business
hours, to inspect, audit and make copies of and abstracts from the Master
Servicer's records regarding any Contract.
(h) Upon request, the Master Servicer shall furnish to the Owner Trustee,
the Indenture Trustee and the Insurer, within five Business Days, a list of all
Contracts then held as part of the Trust Estate, together with a reconciliation
of such list to the Schedule of Contracts and to each of the Distribution Date
Statements furnished before such request indicating removal of Contracts from
the Trust.
(i) The Master Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, each Rating Agency and the Insurer:
(1) promptly after the execution and delivery of this Agreement and of
each amendment hereto, an Opinion of Counsel stating that, in the opinion
of such counsel, the Indenture Trustee holds a perfected security interest
in the Contracts, that the Trust holds title to the Contracts subject to
the security interest of the Indenture Trustee and the lien of the Insurer
pursuant to the Insurance Agreement, and that the Insurer holds a lien on
the Contracts under the Insurance Agreement, subject to applicable
subordination; and
(2) within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the
Cut-Off Date, an Opinion of Counsel, dated as of a date during such 90-day
period, either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of the
Owner Trustee and the Indenture Trustee in the Contracts, and reciting the
details of such
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filings or referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest.
Section 10.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee and the
Indenture Trustee shall be governed by the laws of the State of New York.
Section 10.04. Notices. All demands, notices and communications upon or to
the Seller, the Master Servicer, the Owner Trustee, the Indenture Trustee, the
Insurer or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt in the case of (a) the
Seller, at 23 Pasteur Road, Irvine, California 92618, (b) the Master Servicer,
23 Pasteur Road, Irvine, California 92618, Attention: Legal Department, (c) the
Issuer or the Owner Trustee, at the Corporate Trust Office (with, in the case of
the Issuer, a copy to the Seller), (d) the Indenture Trustee, at Four Albany
Street - 10th Floor, New York, New York 10006, Attention: Corporate Trust
Department - Asset Backed Group, (e) Moody's, to Moody's Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007, (f)
Standard & Poor's, to Standard & Poor's, 26 Broadway (15th Floor), New York, New
York 10004, Attention of Asset Backed Surveillance Department and (g) the
Insurer, at 350 Park Avenue, New York, New York 10022, Attention: Surveillance
Department, with a copy to the Senior Vice President -- Surveillance; or, as to
each of the foregoing, at such other address as shall be designated by written
notice to the other parties. Any notice required or permitted to be to be mailed
to a Securityholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Note Register or the Certificate
Register, as the case may be. Any notice so mailed within the time prescribed
herein shall be conclusively presumed to have been duly given, whether or not
such Securityholder shall receive such notice.
Section 10.05. Severability of Provisions. If one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
Section 10.06. Assignment. Notwithstanding anything to the contrary
contained herein, as provided in Sections 6.03, 7.02 and 8.04, this Agreement
may not be assigned by the Seller or the Master Servicer without the prior
written consent of Holders of Notes of each Class evidencing not less than 66
2/3% of the Outstanding Amount of Notes of such Class and Certificateholders
evidencing not less than 66 2/3% of the Certificate Balance.
Section 10.07. Third Party Beneficiaries. Except as otherwise specifically
provided herein, the parties hereto hereby manifest their intent that no third
party other than the Insurer shall be deemed a third party beneficiary of this
Agreement, and specifically that the Obligors are not third party beneficiaries
of this Agreement.
76
<PAGE> 82
Section 10.08. Insurer Default or Insolvency. If a default under either
Policy has occurred and is continuing or a Insurer Insolvency has occurred, any
provision giving the Insurer the right to direct, appoint or consent to, approve
of, or take any action under this Agreement, shall be inoperative during the
period of such default or the period from and after such Insurer Insolvency and
such consent or approval shall be deemed to have been given for the purpose of
such provisions.
Section 10.09. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
Section 10.10. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 10.11. Assignment by Issuer. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
Section 10.12. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Chase Manhattan Bank Delaware not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Chase Manhattan Bank Delaware in its individual capacity or any beneficial owner
of the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement.
77
<PAGE> 83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
WFS FINANCIAL 1999-C OWNER TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity but
solely as Owner Trustee on behalf
of the Trust
By: ___________________________________
Name:
Title:
WFS FINANCIAL AUTO LOANS, INC.,
as Seller
By: ___________________________________
Name:
Title:
WFS FINANCIAL INC, as Master Servicer
By: ___________________________________
Name:
Title:
Acknowledged and accepted as of
the day and year first above
written:
BANKERS TRUST COMPANY, not in
its individual capacity but
solely as Indenture Trustee
By: ___________________________________
Name:
Title:
<PAGE> 84
SCHEDULE A
SCHEDULE OF CONTRACTS
[Omitted--Schedule of Contracts on file at the offices of the Seller,
the Master Servicer, the Owner Trustee and the Indenture Trustee.]
SA-1
<PAGE> 85
SCHEDULE B
LOCATION OF CONTRACT FILES
WFS Financial Inc WFS Financial Inc
23 Pasteur Rd. 6061 N. State Highway 161
Irvine, CA 92618 Irving, TX 75038
714-727-1000 972-870-8060
WFS Financial Inc WFS Financial Inc
201 Boston Post Road, Suite 101 1883 NE 7th Street, Suite H
Marlboro, MA 01752 Grants Pass, OR 97526
503-222-8855 503-955-1402
WFS Financial Inc WFS Financial Inc
8548 SW Apple Way Suite 100 3872 Center Street N.E.
Portland, OR 97225 Salem, OR 97301
503-291-0010 503-581-9977
SB-1
<PAGE> 86
EXHIBIT A
[FORM OF CERTIFICATE POLICY]
A-1
<PAGE> 87
EXHIBIT B
[FORM OF INSURANCE AGREEMENT]
B-1
<PAGE> 88
EXHIBIT C
[FORM OF NOTE POLICY]
C-1
<PAGE> 89
EXHIBIT D
[FORM OF RIC]
D-1
<PAGE> 90
EXHIBIT E
[FORM OF SUBSERVICING AGREEMENT]
E-1
<PAGE> 91
EXHIBIT F
[FORM OF DISTRIBUTION DATE STATEMENT]
F-1
<PAGE> 1
EXHIBIT 23.3
[PRICEWATERHOUSECOOPERS LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------
We consent to the incorporation by reference in Amendment No. 1 to Form S-3 of
WFS Financial Auto Loans, Inc. relating to WFS Financial 1999-C Owner Trust of
our report dated January 26, 1999 on our audits of the consolidated financial
statements of Financial Security Assurance Inc. and Subsidiaries as of December
31, 1998 and 1997, and for each of the three years in the period ended December
31, 1998. We also consent to the reference to our Firm under the caption
"Experts".
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
October 21, 1999
<PAGE> 1
EXHIBIT 25.1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b)(2) ___________
--------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent
for service)
--------------------
WFS FINANCIAL 1999-C OWNER TRUST
(Exact name of Registrant as specified in its charter)
WFS FINANCIAL AUTO LOANS, INC.
(Exact name of Co-Registrant as specified in its charter)
CALIFORNIA 33-0149603
(State or other jurisdiction of (I.R.S. employer Identification no.)
Incorporation or organization)
23 PASTEUR ROAD
IRVINE, CA 92618
(949) 727-1000
(Address, including zip code of principal executive offices)
WFS FINANCIAL 1999-C OWNER TRUST
AUTO RECEIVABLE BACKED NOTES
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising authority to
which it is subject.
NAME ADDRESS
---- -------
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each such
affiliation.
None.
ITEM 3.-15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers Trust Company
dated August 7, 1990, Certificate of Amendment of the
Organization Certificate of Bankers Trust Company dated
June 21, 1995 Incorporated herein by reference to Exhibit 1
filed with Form T-1 Statement, Registration No. 33-65171,
Certificate of Amendment of the Organization Certificate of
Bankers Trust Company dated March 20, 1996, incorporate by
referenced to Exhibit 1 filed with Form T-1 Statement,
Registration No. 333-25843 and Certificate of Amendment of
the Organization Certificate of Bankers Trust Company dated
June 19, 1997, copy attached.
EXHIBIT 2 - Certificate of Authority to commence business Incorporated
herein by reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 333-12199.
EXHIBIT 3 - Authorization of the Trustee to exercise corporate trust
powers - Incorporated herein by reference to Exhibit 2
filed with Form T-1 Statement, Registration No. 333-12199.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company, as amended on
November 18, 1997. Copy attached.
-2-
<PAGE> 3
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required by Section 321(b)
of the Act. - Incorporated herein by reference to Exhibit 4
filed with Form T-1 Statement, Registration No. 22-18864.
EXHIBIT 7 - The latest report of condition of Bankers Trust Company
dated as of September 30, 1998. Copy attached.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on the 22nd day
of October, 1999.
BANKERS TRUST COMPANY
By: /s/ PATRICIA MF RUSSO
-------------------------
Patricia MF Russo
Vice President
-4-
<PAGE> 5
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER SECTION
8005 OF THE BANKING LAW," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City of New
York, this 27TH day of June in the Year of our Lord one thousand nine hundred
and ninety-seven.
Manuel Kursky
------------------------------
Deputy Superintendent of Banks
<PAGE> 6
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing
Director and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into One
Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 600 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE> 7
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
James T. Byrne, Jr.
------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
----------------------
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
Sandra L. West
-----------------
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 2003
<PAGE> 8
BY-LAWS
NOVEMBER 18, 1997
BANKERS TRUST COMPANY
NEW YORK
<PAGE> 9
BY-LAWS
OF
BANKERS TRUST COMPANY
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
<PAGE> 10
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE> 11
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
<PAGE> 12
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records
<PAGE> 13
and premises of the Company and shall delegate such authority to his
subordinates. He shall have the duty to report to the Audit Committee on all
matters concerning the internal audit program and the adequacy of the system of
internal controls of the Company which he deems advisable or which the Audit
Committee may request. Additionally, the General Auditor shall have the duty of
reporting independently of all officers of the Company to the Audit Committee at
least quarterly on any matters concerning the internal audit program and the
adequacy of the system of internal controls of the Company that should be
brought to the attention of the directors except those matters responsibility
for which has been vested in the General Credit Auditor. Should the General
Auditor deem any matter to be of special immediate importance, he shall report
thereon forthwith to the Audit Committee. The General Auditor shall report to
the Chief Financial Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE> 14
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company,
<PAGE> 15
evidenced by a written communication signed by the Chairman of the Board, the
Chief Executive Officer or the President, and (ii) only if and to the extent
that, after making such efforts as the Chairman of the Board, the Chief
Executive Officer or the President shall deem adequate in the circumstances,
such person shall be unable to obtain indemnification from such other enterprise
or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
<PAGE> 16
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE> 17
I, Patricia MF Russo, Vice President of Bankers Trust Company, New York, New
York, hereby certify that the foregoing is a complete, true and correct copy of
the By-Laws of Bankers Trust Company, and that the same are in full force and
effect at this date.
/s/ PATRICIA MF RUSSO
--------------------------
VICE PRESIDENT
DATED: October 22, 1999
<PAGE> 18
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 9/30/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State Zip: New York, NY 10006 11
FDIC Certificate No.: 0 0 6 2 3
-----------
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR SEPTEMBER 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
---------
C400
---------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------- --------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1) ................................... 0081 2,291,000 1.a.
b. Interest-bearing balances(2) ............................................................ 0071 2,636,000 1.b.
2. Securities: //////////////////
a. Held-to-maturity securities (from Schedule RC-B, column A) .............................. 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ............................ 1773 6,617,000 2.b.
3. Federal funds sold and securities purchased under agreements to resell ..................... 1330 32,734,000 3.
4. Loans and lease financing receivables: //////////////////
a. Loans and leases, net of unearned income (from Schedule RC-C) ......RCFD 2122 20,227,000 ////////////////// 4.a.
b. LESS: Allowance for loan and lease losses ..........................RCFD 3123 619,000 ////////////////// 4.b.
c. LESS: Allocated transfer risk reserve ..............................RCFD 3128 0 ////////////////// 4.c.
d. Loans and leases, net of unearned income, //////////////////
allowance, and reserve (item 4.a minus 4.b and 4.c) ..................................... 2125 19,608,000 4.d.
5. Trading Assets (from Schedule RC-D) ........................................................ 3545 49,545,000 5.
6. Premises and fixed assets (including capitalized leases) ................................... 2145 885,000 6.
7. Other real estate owned (from Schedule RC-M) ............................................... 2150 115,000 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) ... 2130 391,000 8.
9. Customers' liability to this bank on acceptances outstanding ............................... 2155 392,000 9.
10. Intangible assets (from Schedule RC-M) ..................................................... 2143 266,000 10.
11. Other assets (from Schedule RC-F) .......................................................... 2160 5,884,000 11.
12. Total assets (sum of items 1 through 11) ................................................... 2170 121,364,000 12.
-------------------
</TABLE>
- ----------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE> 19
<TABLE>
<S> <C> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 06/30/98 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street VENDOR ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: 0 0 6 2 3
---------
</TABLE>
SCHEDULE RC--CONTINUED
<TABLE>
<CAPTION>
---------------------------
Dollar Amounts in Thousands /////////// Bil Mil Thou
- ----------------------------------------------------------------------------------------------- --------------------------
<S> <C> <C> <C>
LIABILITIES ///////////////////////
13. Deposits: ///////////////////////
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, part I) ..... RCON 2200 22,231,000 13.a.
(1) Noninterest-bearing(1) ................................ RCON 6631 3,040,000 /////////////////////// 13.a.(1)
(2) Interest-bearing ...................................... RCON 6636 19,191,000 /////////////////////// 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, ///////////////////////
part II) .............................................................................. RCFN 2200 21,932,300 13.b.
(1) Noninterest-bearing ................................... RCFN 6631 2,423,000 /////////////////////// 13.b.(1)
(2) Interest-bearing ...................................... RCFN 6636 19,509,000 /////////////////////// 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase RCFD 2800 14,360,000 14.
15. a. Demand notes issued to the U.S. Treasury .............................................. RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D) .............................................. RCFD 3548 32,890,000 15.b.
16. Other borrowed money: (includes mortgage indebtedness and obligations under capitalized ///////////////////////
leases): ///////////////////////
a. With a remaining maturity of one year or less ......................................... RCFD 2332 7,653,000 16.a.
b. With a remaining maturity of more than one year through three years ................... A547 3,707,000 16.b.
c. With a remaining maturity of more than three years .................................... A548 3,034,000 16.c.
17. Not Applicable /////////////////////// 17.
18. Bank's liability on acceptances executed and outstanding ................................. RCFD 2920 392,000 18.
19. Subordinated notes and debentures(2) ..................................................... RCFD 3200 1,533,000 19.
20. Other liabilities (from Schedule RC-G) ................................................... RCFD 2930 6,595,000 20.
21. Total liabilities (sum of items 13 through 20) ........................................... RCFD 2948 114,327,000 21.
///////////////////////
22. Not Applicable /////////////////////// 22.
EQUITY CAPITAL ///////////////////////
23. Perpetual preferred stock and related surplus ............................................ RCFD 3838 1,500,000 23.
24. Common stock ............................................................................. RCFD 3230 2,002,000 24.
25. Surplus (exclude all surplus related to preferred stock).................................. RCFD 3839 540,000 25.
26. a. Undivided profits and capital reserves ................................................ RCFD 3632 3,421,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ RCFD 8434 (46,000) 26.b.
27. Cumulative foreign currency translation adjustments ...................................... RCFD 3284 (380,000) 27.
28. Total equity capital (sum of items 23 through 27) ........................................ RCFD 3210 7,037,000 28.
29. Total liabilities and equity capital (sum of items 21 and 28) ............................ RCFD 3300 121,364,000 29.
------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that Number
best describes the most comprehensive level of auditing work performed ----------------------
for the bank by independent external auditors as of any date during 1997 ....................... RCFD 6724 N/A M.1.
----------------------
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in accordance 8 = No external audit work
with generally accepted auditing standards by a certified
public accounting firm (may be required by state
chartering authority)
</TABLE>
- ----------
(1) Including total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
